OECD Working Papers on Sovereign Borrowing and Public Debt Management
These studies are prepared for dissemination among sovereign debt managers, financial policy makers, regulators, financial market participants, rating agencies, and academics. By providing information on this highly specialised field of government activity and policy, papers aim to stimulate discussions among a wider audience as well as further analysis.
- ISSN: 22264132 (online)
- https://doi.org/10.1787/22264132
Buyback and Exchange Operations
Policies, Procedures and Practices among OECD Public Debt Managers
Bond exchanges and buyback operations serve two main purposes. First, by reducing the outstanding amounts of bonds close to maturity, exchanges and buybacks help in reducing roll-over peaks and thus lowering refinancing risk. Second, exchanges and buybacks allow debt managers to increase the issuance of on-the-run securities above and beyond what would otherwise have been possible. The resulting more rapid build-up of new bonds enhances market liquidity of these securities. This in turn should eventually be reflected in higher bond prices. Hence, bond exchanges and buybacks are aimed at lowering refinancing risk. In addition these operations may also contribute to lower funding costs for governments.
- Click to access:
-
Click to download PDF - 859.50KBPDF
-
Click to Read online and shareREAD