Annex A. OECD 2021 Survey on Primary Markets Developments
This annex belongs to the OECD Sovereign Borrowing Outlook 2022.
Thirty-seven of the 38 OECD countries responded to this survey.
Countries which responded to the survey but did not provide comments to a question may not appear in the table of answers. The requested date for a response to the survey was 15 October 2021.
Source: 2021 Survey on Primary Markets Developments by the OECD Working Party on Debt Management.
Table A.1. Overview of issuing procedures | |||||||
---|---|---|---|---|---|---|---|
Auctions | Auction type | Tap issues | Syndication | ||||
| Long-term | Short-term | Single-price | Multiple-price | Long-term | Short-term | |
Australia | X | X |
| X | X |
| X |
Austria | X | X | X | X | X | X | X |
Belgium | X | X |
| X | X | X | X |
Canada | X | X | X | X |
|
| X |
Chile | X | X | X |
| X | X | X |
Colombia | X | X | X |
| X |
| X |
Costa Rica | X |
|
| X | X |
|
|
Czech Republic | X | X | X | X | X |
|
|
Denmark | X | X | X |
| X |
| X |
Estonia |
| X |
| X |
|
| X |
Finland | X | X | X |
| X | X | X |
France | X | X |
| X | X | X | X |
Germany | X | X |
| X | X | X | X |
Greece |
| X | X |
| X |
| X |
Hungary | X | X |
| X | X | X | X |
Iceland | X | X | X |
|
|
| X |
Ireland | X | X | X |
| X | X | X |
Israel | X | X |
| X | X | X |
|
Italy | X | X | X | X | X | X | X |
Japan | X | X | X | X |
|
|
|
Korea | X | X | X | X | X | X |
|
Latvia | X |
|
| X | X |
| X |
Lithuania | X | X |
| X | X | X |
|
Luxembourg |
|
|
|
|
|
| X |
Mexico (local market debt) | X | X | X | X | X | X | X |
Mexico (external market debt) |
|
|
|
|
|
| X |
Netherlands | X | X | X | X | X | X |
|
New Zealand | X | X |
| X | X |
| X |
Norway | X | X | X |
|
|
| X |
Poland | X | X | X | X | X | X | X |
Portugal | X | X | X | X | X | X | X |
Slovak Republic | X | X | X | X | X | X | X |
Slovenia | X | X | X |
| X |
| X |
Spain | X | X |
| X | X | X | X |
Sweden | X | X |
| X |
| X | X |
Switzerland | X | X | X |
| X |
|
|
Turkey | X | X |
| X |
|
|
|
United Kingdom | X | X | X | X | X | X | X |
Total | 34 | 34 | 22 | 26 | 29 | 20 | 29 |
Table A.2. Q1 Overview of issuing procedures – country notes | |
---|---|
| Country notes |
Australia |
|
Austria | In August 2021, Austria has started with regular auctions for Austrian Treasury Bills (ATBs). ATB auctions are single-price whereas Austrian government bond (RAGB) auctions are multiple-price. In general, syndications are used for new government bond issues only. Over the past years, Austria has successfully conducted parallel auctions (tap of two bonds at one auction) and dual-tranche syndications (syndicated issuance of two bonds at the same time). |
Belgium |
|
Canada | Canada issues most of its domestic debt through multiple-price auction format. All nominal bonds and treasury bill auctions are multiple-price, whereas real return bonds (inflation-indexed bonds) and the ultra-long bonds are issued through a single-price auction format. In 2014, Canada initially issued its 50-year bond through a syndication format. As of August 2017, Canada now issues its ultra-long bond through a modified single-price auction format. Canada issues foreign currency global bonds through syndication, Medium Term Notes (MTNs) /Euro Medium Term Notes (EMTNs) on a reverse inquiry basis and operates a Commercial Paper program in USD. |
Chile |
|
Colombia | Our local bonds are issued mainly through auctions and our external debt through a book building process with a syndication of banks. We also have loans with development banks and multilateral organizations as part of our funding sources. Our Global Bonds are issued by book building and are 10 years or longer. |
Costa Rica | Ministry of Finance of Costa Rica conducts multiple-price auctions with allocation under the Dutch methodology. In 2018, the last and only syndication was carried out, known as "contratos de colocación". |
Czech Republic | · Primary market (auction type) T-bonds: multi-price auction T-bills: single-price auction Secondary market operations (auction type) Tap-issues: single-price auction Exchange operations: single-price auction |
Denmark | Syndication is used in relation to foreign issuance, i.e. EMTN issues. |
Estonia | Estonia has no regular issuance calendar. |
Finland |
|
France | Syndication mainly used for curve extension or new products |
Germany | Traditionally, we issue and tap securities for long- and short-term borrowing via multi-price auctions. This year, two syndicates were carried out: adding a new 30-year maturity segment to the green segment (€ 6bn) refreshing the Bund curve with the a new 30-year benchmark (€ 5.5 bn) |
Greece |
|
Hungary | After bond auctions there can be a non-competitive top-up tender, which is a single-price (average auction price) issuance. Some types of T-bills and bonds are sold via tap issuance or via subscriptions for retail investors. Syndication is used only for the issuance of foreign exchange bonds in the international markets. |
Iceland | Single price format used for T-bills and T-bonds. Syndication is used for foreign debt borrowing |
Ireland |
|
Israel | The majority of the issuing is by Tap. |
Italy | The Italian Treasury makes use of two kinds of auction: - a competitive (multi-price) auction on a yield basis, for T-bills; - a marginal price (single-price) auction - where the auction price and the quantity issued are determined discretionally by the Treasury within a preannounced range of amounts in issuance - for all medium-long terms bonds (nominal fixed and floating rate bonds, and inflation indexed bonds). The Treasury normally makes use of syndication: - in case of issuance of new types of bonds (for instance, BTP€i in 2003 and CCTeu in 2010) or benchmarks in new segments of the nominal and European inflation curves (e.g.: 7-year BTP, 5-year BTP€i with a new coupon cycle); - in case of issuance of new nominal bonds with maturities above 10 years and new inflation linkers with maturities of 10 years or more. Starting from 2020 the Italian Treasury has started to make use of the syndicated placements even for the launch of new benchmark, both nominal and inflation-linked, with maturity equal or lower than 10 years. However, this may occur in exceptional circumstances, when the market conditions require since the beginning an efficient allocation among final investors and the achievement of a size that guarantees a good performance on the secondary market. As for the BTP Italia (linked to the Italian inflation) and starting from 2020 also for the BTP Futura (dedicated to retail investors), the Treasury makes use of a specific method of issuance, which allows for collecting purchase orders through the retail screen-based market for government bonds, the MOT platform of Borsa Italiana. A minimum coupon rate (for BTP Futura a set of annual minimum coupon rates) is announced the day before the starting of the issuance process, while the final coupon rate (for BTP Futura a set of annual coupon rates) is determined at the end of the placement period based on market conditions, whereas the issue price is fixed at par. For the BTP Italia the placement period is divided into a First Phase and a Second Phase. The First Phase is reserved to retail investors, while during the Second Phase all investors (including banks and other institutional investors) are allowed to participate. For the BTP Futura only retail investors are allowed to buy the bond during the placement period. Starting from April 2020 and consistently with what announced in the Update of the Guidelines for Public Debt Management for 2020, the Italian Treasury has introduced a new modality to issue one or more off-the-run securities through the electronic trading system (“TAP ISSUE”). These Tap reopening operations of off-the-run bonds are executed outside the auction calendar and are reserved to Specialists in Government Bonds. Moreover, the opportunity and type of bonds to be issued are evaluated according to specific demand requirements. |
Japan | Price-competitive & multiple-price auction methods are used in Japan, except for the auctions for: 40-year bonds (yield-competitive & single-price auction), Inflation-indexed bonds (price-competitive & single-price auctions) and Liquidity Enhancement Auctions (yield-spread-competitive & multiple-price auctions). Also, reopening is conducted for JGBs except for T-Bills and 2-year bonds. |
Korea | We introduced single-price auction type from March (originally planned to operate till September) |
Latvia | The Answer is based on the actual funding program of 2021, when Latvia did not issue any short term securities. However if the question is about procedures available, then in terms of the short term debt - the same type of procedures would apply to it as to the long term debt. |
Lithuania | The Government borrows by issuing both short– and long–term securities in the auctions and later tapping them. However, since 2015, due to market conditions (low interest rates) short-term securities were issued just once in April 2020. |
Luxembourg |
|
Mexico (local market debt) | Local Market Debt The quarterly issuing calendar remains as one of the most important tools for the announcement of the future issuing plan as it details the issuing scheme for zero coupon bonds, nominal bonds, inflation-linked bonds and floaters. Regarding the bonds auction pricing, the floaters are currently the only type of bonds that use both auction types of pricing, single and multiple. Syndicated auctions, are only used when there is a new instrument to be issued and used in the quarterly calendars. Given the weekly frequency of auctions Tap Issues occur quite regularly. |
Mexico (external market debt) | External Market Debt The process of Mexico’s debt issuances in international financial markets is made through a syndication. The characteristics of any debt issuance will depend on market conditions and the specific objectives the Federal Government has at the time, that been said its very important to mention that Mexico has a large access to the USD dollar, the euro and the yen market which means that practically all the tenors are available for Mexico in those markets. Also, tap issues it’s a very common tool the Federal Government uses in both the US dollar and the euro market. |
Netherlands |
|
New Zealand | New bond lines are issued via syndication, whilst existing bond lines are generally issued by weekly tenders. Treasury Bills are issued via weekly tenders. |
Norway | New bonds are introduced by syndication, while new Treasury bills are issued through uniform price auctions. Both bills and bonds are regularly reopened by auctions. Auctions are conducted via the Bloomberg Auction System. Only primary dealers are authorised to participate in the auctions. They are obliged to participate in every auction of bills and bonds. The issue amount and tenor are published two days prior to the auction. |
Poland | Single price auction is used in T-bill and T-bond regular sale auctions as well as T-bond switching auctions. Multiple price model is used in buy-back auctions. There is a possibility of placing non-competitive bids on T-bond and T-bill sale and T-bond switching auctions. Primary Dealers, that purchased Treasury securities at the sale auction, have the right to purchase on the auction day additional Treasury securities at the minimum (stop) price set at the sale auction (additional sell). Syndication has been mainly used for Treasury securities issues on foreign markets. |
Portugal | Syndications: T-Bonds only. Auction type: T-Bonds: Single Price T-Bills: Multiple Price *Tap issues correspond to reopening the series via auctions for both T-Bonds and T-Bills. T-Bonds can also be tapped via syndication or other formats, such as exchange offers. |
Slovak Republic | Single price only for T-Bills, currently all other auctions with multiple price |
Slovenia | Auctions apply for Treasury Bills only – Slovenia is not performing bond auctions. Syndication remains the exclusive issuance method for the government bonds. However, the auctions system and auction rules for the government bond auctions are in place. |
Spain | The Spanish Treasury usually does the first issuance of longer-term bonds through syndications. Afterwards, these benchmark bonds are tapped through auctions, until they are “filled”, with a size of approximately €20 bn. After a benchmark is filled, or it is no longer representative of its point on the curve, a new benchmark is issued. For shorter-term bonds and bills, only auctions are used, both for initial issuance and taps. |
Sweden | Sweden issued a 50-year government bond in June 2021, via syndication procedure. |
Switzerland | Almost all of our debt (bills as well as bonds, both new issues and reopenings) is issued under an auction system with a Dutch tender (the one exception are our “own tranches”, see below). The reopening of already issued bonds (implemented by auction) is comparable with the auctioning of new bonds. To support market liquidity, we aim to have only one outstanding bond per year with a volume of around 4 billion CHF at maturity. Because of our limited financial needs and limited market demand, we do not auction the entire volume at once but reopen individual bonds several times over their entire lifetime until they reach our target volume. Between auction dates, the Federal Treasury sells so called “own tranches” from time to time to support market liquidity and cover extraordinary market demand. Own tranches are Government Bonds owned by the Confederation and can be sold on demand at market prices (own tranches are not yet placed/settled, the whole issuance process is completed except the sale to the investor à primary market transaction). Every time we auction a bond, we reserve own tranches of up to 300 million CHF of the issued bond (in addition to auctioned volume) if required. We consider the selling of own tranches as tap issues. Year to date we have sold own tranches of around 0.6 billion CHF (roughly 10 percent of total bond issuance) to bolster market liquidity. In the years before the pandemic we did not sell any own tranches due to limited financial needs. |
Turkey | Domestic debt securities are issued mainly through auction (multiple-price auction system). On the other hand, sukuk (lease certificate) issuances in the domestic market are held by direct sale method. |
United Kingdom | We hold single-price auctions for inflation-linked gilts and multiple-price auctions for nominal gilts. |
Table A.3. Q1b Overview of recent changes in issuing procedures and techniques | |
---|---|
Australia | The AOFM increased usage of syndications to achieve the required funding rate in 2020/2021 |
Austria | Austria introduced a new program for EUR Austrian Treasury Bills (ATBs) under Austrian law in July 2021. Under the new ATB programme there will be regular auctions - the first one was successfully held on the 24th of August 2021. The existing ATB programme, under English law, was renamed to ACP programme (Austrian Commercial Paper) in August 2021 for differentiation purposes and in order to be able to address future demand of short-term foreign currency issuances. The decision to create a second short-term funding programme was also made in order to increase Austria‘s financial flexibility and expand Austria´s investor base. |
Belgium | No changes compared to 2020. What was new in 2020 and 2021 has been the use of loans under the EU SURE program as an additional source of funding. |
Canada | Canada’s current debt distribution framework has been in place since the late 1990s. There have been no notable changes to the issuing procedures. The MTN program was re-introduced in 2012. The EMTN program was re-introduced in 2013. In 2014, Canada initially issued its 50-year bond through a syndication format. As of August 2017, Canada now issues its ultra-long bond through a modified single-price auction format. |
Chile | During a long time, the normal process to issue were the Dutch auction. In order to reach international investors and promote their participation, the book building process was implemented in 2017. Recently, due to the situation derived from COVID, the MoF decided to issue in shorter maturities, and thus T-bills have been recently issued. |
Colombia | In 2021, the Government of Colombia issued the first Green Bond through auctions in the local bond market following the structure of twin bonds in the 10 year tenor. |
Costa Rica | The Ministry of Finance of Costa Rica approved in April 2021 the standardized internal debt issuance plan of the Central Government, which defines the general guidelines for the issuance of internal debt. Likewise, since January 2019 the Ministry of Finance publishes a calendar of auctions to the market with information on the dates of the events, the deadlines, the currency, the trading platform, and auctions are held every 15 days, and also operations of management of liabilities such as debt swaps. For the month of February 2021, the Ministry of Finance approved and published the debt strategy of the Central Government. |
Czech Republic | No recent changes. |
Denmark |
|
Estonia |
|
Finland |
|
France | Slight adjustment in our auction calendar following the pandemic (additional auction in August) |
Germany |
|
Greece |
|
Hungary | There has been no change. |
Iceland | No changes since the last survey. |
Ireland | In general our issuance techniques have not changed. However in 2021 we conducted more three-line auctions, and have also tapped more off-the-run bonds in response to PD requests for liquidity |
Israel | The issuing procedures hasn’t change recently. |
Italy | There are no changes in issuing procedures and techniques occurred in the last 12 months. |
Japan | Cap of the amount of a bid of the Non-Price Competitive Auction II (*1) was lowered from 15% to 10% of each participant's total successful bids in the competitive auction and Non-Price Competitive auction I (*2) from an auction in January 2020. Non-Price Competitive Auction II for the Inflation-Indexed Bonds has been canceled since April 2020. (*1) Non-Price Competitive Auction II is an auction carried out after the competitive auction is finished. The price offered is equal to the weighted average accepted price in the price-competitive auction or issuance price in Dutch-style competitive auction. Only the JGB Market Special Participants are eligible to bid in this auction. Each participant is allowed to bid up to the amount set based on the result of its bids during the preceding two quarters. (*2) Non-Price Competitive Auction I is an auction in which biddings are offered at the same time as for the price- competitive auction. The maximum issuance amount is set at 20% of the total planned issuance amount and the price offered is equal to the weighted average accepted price of the price- competitive auction. Only the JGB Market Special Participants are eligible to bid in this auction. Each participant is allowed to bid up to the amount set based on the result of its successful bids during the preceding two quarters. |
Korea |
|
Latvia | No changes have taken place in the procedure or technics of issuing government securities. The only change that happened for local market was introduced in October 2020 introducing Eurobond TAPs (auctions of reopening outstanding XS Eurobonds under English law) |
Lithuania | Issuing procedures and techniques haven’t changed recently. With a slight exception that since September 2021, syndicated issues are also being re-opened in the auctions. |
Luxembourg | None |
Mexico (local market debt) | Local Market Debt Recently, the Mexico’s Federal Government has made use the communicating vessels scheme for floaters, allowing us to identify and locate the investors demand and appetite; therefore, focusing our issuing plans on those particular nodes. |
Mexico (external market debt) | External Market Debt No changes have taken place in the process of issuing debt in international financial markets. |
Netherlands | No significant changes |
New Zealand | In response to COVID-19, 2019/20 and 2020/21 issuance included tap syndications of existing bond lines to help to quickly issue increased volumes. Given the size of our forecast borrowing programmes, we do not intend to issue via tap syndication in the 2021/22 fiscal year. |
Norway | The auction terms were changed in June 2021. Norges Bank will normally auction off the announced sales volume, but is not obliged to do so. In special situations where the total volume of accepted tenders is lower than the announced sales volume, Norges Bank may cancel the auction or issue a lower volume. Norges Bank has the right to reject tenders that are not submitted on market terms. |
Poland | No changes in the current year. |
Portugal | There were no relevant changes in the issuing procedures and techniques in the last 12 months. During this year, issuing procedures and techniques were standard: both via syndications and auctions. |
Slovak Republic | No changes compared to 2020. |
Slovenia | No changes recently. |
Spain | We have carried out larger auctions due to the temporary increase in funding needs and carried out a few more syndications, but the overall strategy described in the previous paragraph has not changed. One small change made for our auctions was to carry out the second-round (greenshoe) at the marginal price of the auction, instead of the average weighted price. This was done to increase the attractiveness of our primary market issuance. |
Sweden |
|
Switzerland | No recent changes |
Turkey | No change. |
United Kingdom | Auctions remain the primary issuance method along the maturity curve. In the 2021-22 financial year (which starts on 1 April 2021), the UK DMO has raised approximately £139bn (as at 5 October 2021); 79% of proceeds (approximately £110bn) have been raised via the auction programme and the post-auction option facility (PAOF), whilst the remaining 21% (£29bn) of proceeds have been raised via the syndication programme. In financial year 2020-21, (starting on 6 April 2020), in light of the expanded issuance programme necessitated by the UK government’s response to the COVID-19 pandemic, the DMO adapted its auction schedule to include some days where two auctions are held on the same day. We have continued to allow for this approach in financial year 2021-22, although days on which two auctions are held have become less frequent due to the relatively smaller size of the financing programme this year. Two bidding windows were established for the two different auctions: from 9.00am to 10.00am for the first auction and from 10.30am to 11.30am for the second. The DMO also maintained the availability of the post auction option facility (PAOF) but the length of the window has been condensed. In the period prior to these changes, when only one auction was held on any day, auctions closed at 10:30am and the PAOF window was open from midday to 2pm on the same day as the auction. In order to ensure that we are able to offer the PAOF at both auctions where two are scheduled on the same day, the respective PAOF windows are open for a shorter period. In cases where there is a single auction on one day, the PAOF window operates from 12.30pm to 1.00pm. In cases where there are two auctions on one day, the PAOF windows operate from 12.30pm to 1.00pm for the first auction and from 2.00pm to 2.30pm for the second auction. On 21 September 2021, the UK launched via syndication its inaugural green gilt (0⅞% Green Gilt 2033). The transaction raised approximately £10bn (cash) and was the largest sovereign green bond issue to date. On 1 October 2021, the DMO announced its intention to launch a new green gilt maturing in 2053 via syndication, in the week commencing 18 October 2021, subject to demand and market conditions. Green gilt issuance is a key priority for the UK government to help finance projects that will tackle climate change and to finance infrastructure investment. |
Table A.4. Q2 Have you issued or plan to issue any new types of securities like inflation-linked bonds, variable rate notes, green bonds, and longer dated securities? | ||||
---|---|---|---|---|
YES, new types of securities were/will be issued | NO new types of securities were/will be issued | |||
Last 12 months | Next 12 months | Last 12 months | Next 12 months | |
Australia |
|
| X | X |
Austria | X | X |
|
|
Belgium |
|
| X | X |
Canada |
| X | X |
|
Chile | X |
|
|
|
Colombia | X |
|
|
|
Costa Rica |
| X | X |
|
Czech Republic |
|
| X | X |
Denmark |
| X |
|
|
Estonia |
|
| X | X |
Finland |
|
| X | X |
France |
|
| X | X |
Germany |
|
| X |
|
Greece |
| X | X |
|
Hungary | X | X |
|
|
Iceland |
|
| X | X |
Ireland |
|
| X |
|
Israel |
|
| X |
|
Italy | X |
|
| X |
Japan |
|
| X | X |
Korea | X |
|
|
|
Latvia |
| X |
|
|
Lithuania |
|
| X | X |
Luxembourg | X |
|
| X |
Mexico (local market debt) |
| X | X |
|
Mexico (external market debt) | X | X |
|
|
Netherlands | X | X |
|
|
New Zealand | X |
|
| X |
Norway |
|
| X | X |
Poland |
|
| X | X |
Portugal |
|
| X | X |
Slovak Republic |
|
| X | X |
Slovenia | X |
|
| X |
Spain | X |
|
| X |
Sweden | X |
|
|
|
Switzerland |
|
| X | X |
Turkey |
|
| X | X |
United Kingdom | X | X |
|
|
Total | 14 | 11 | 22 | 20 |
Table A.7. Q2 Other types of securities | ||
---|---|---|
Others issued in the LAST 12 months | Others issued in the NEXT 12 months | |
Australia |
|
|
Austria | Specify (i): Austrian Treasury Bills auction programme |
|
Belgium |
|
|
Canada |
|
|
Chile |
|
|
Colombia |
|
|
Costa Rica |
|
|
Czech Republic |
|
|
Denmark |
|
|
Estonia |
|
|
Finland |
|
|
France |
|
|
Germany |
|
|
Greece |
|
|
Hungary |
|
|
Iceland |
|
|
Ireland |
|
|
Israel |
|
|
Italy |
|
|
Japan |
|
|
Korea | Specify (i): shorter dated securities (2y) |
|
Latvia |
|
|
Lithuania |
|
|
Luxembourg |
|
|
Mexico (local market debt) |
| Specify (i): SDG aligned bonds |
Mexico (external market debt) | Specify (i): SDG aligned bonds | Specify (i): SDG aligned bonds |
Netherlands |
|
|
New Zealand |
|
|
Norway |
|
|
Poland |
|
|
Portugal |
|
|
Slovak Republic |
|
|
Slovenia |
|
|
Spain |
|
|
Sweden |
|
|
Switzerland |
|
|
Turkey |
|
|
United Kingdom |
|
|
Table A.8. Q3 Major challenges experienced over the last 12 months | |||||||||
---|---|---|---|---|---|---|---|---|---|
Changes in government’s funding needs | Cash flow forecasting | Market volatility | Understanding investor behaviour | Operational challenges | Lack of investor demand | Communication with fiscal & monetary authorities | Communication with market participants | Others | |
Australia | X | X | X |
| X |
|
|
|
|
Austria | X | X |
|
|
|
|
|
|
|
Belgium |
| X |
|
|
|
|
|
|
|
Canada | X | X | X |
| X |
|
|
|
|
Chile | X | X | X |
|
| X |
|
|
|
Colombia |
| X | X |
|
|
|
|
|
|
Costa Rica |
|
|
| X |
|
|
|
| X |
Czech Republic | X | X | X |
| X |
|
|
|
|
Denmark | X | X |
|
|
| X |
|
|
|
Estonia | X | X |
|
|
|
|
|
|
|
Finland | X | X |
|
|
|
|
|
|
|
France |
| X |
|
| X |
|
|
|
|
Germany | X |
|
|
|
|
|
|
|
|
Greece | X | X | X | X |
|
|
|
|
|
Hungary | X |
| X | X |
|
|
|
|
|
Iceland | X | X | X |
|
|
| X |
|
|
Ireland | X | X | X |
|
|
|
|
|
|
Israel | X | X | X | X | X |
|
|
|
|
Italy | X | X | X | X |
|
|
|
|
|
Japan |
|
|
|
|
|
|
|
|
|
Korea | X |
| X |
|
|
|
| X |
|
Latvia | X | X | X |
|
|
|
|
| X |
Lithuania | X |
|
| X |
| X |
|
|
|
Luxembourg | X |
|
|
| X |
|
|
|
|
Mexico (local market debt) |
|
| X | X |
| X |
|
| 4 |
Mexico (external market debt) | X |
| X |
|
|
|
|
|
|
Netherlands | X | X |
|
| X |
|
|
|
|
New Zealand | X | X | X |
|
|
|
|
|
|
Norway |
|
|
|
|
| X |
|
|
|
Poland | X | X | X |
| X |
| X |
|
|
Portugal | X | X | X |
|
|
|
|
|
|
Slovak Republic | X | X | X | X |
|
|
|
| X |
Slovenia | X |
| X |
|
|
|
|
|
|
Spain | X |
|
|
| X |
|
|
|
|
Sweden | X | X |
|
|
|
|
|
|
|
Switzerland | X | X |
| X | X |
| X | X |
|
Turkey | X | X | X |
| X | X |
|
| X |
United Kingdom | X | X | X |
| X |
|
|
|
|
Total | 31 | 26 | 22 | 9 | 12 | 6 | 3 | 2 | 8 |
Table A.9. Q3 Specified OTHER major challenges experienced over the last 12 months | |
---|---|
Australia |
|
Austria |
|
Belgium |
|
Canada |
|
Chile |
|
Colombia |
|
Costa Rica | (i) please specify: Lack of demand for issues in foreign currency: US dollars and variable rate. |
Czech Republic |
|
Denmark |
|
Estonia |
|
Finland |
|
France |
|
Germany |
|
Greece |
|
Hungary |
|
Iceland |
|
Ireland |
|
Israel |
|
Italy |
|
Japan |
|
Korea |
|
Latvia | (i) please specify: Monetary policy changes, announcements, decisions |
Lithuania |
|
Luxembourg |
|
Mexico (local market debt) | (i) inflation dynamics, (ii) monetary policy adjustments, (iii) capital outflows, and (iv) short-term refinancing needs |
Mexico (external market debt) |
|
Netherlands |
|
New Zealand |
|
Norway |
|
Poland |
|
Portugal |
|
Slovak Republic | (i) please specify: Act on Fiscal Responsibility (Debt Brake) |
Slovenia |
|
Spain |
|
Sweden |
|
Switzerland |
|
Turkey | (i) please specify: Pandemic |
United Kingdom |
|
Table A.10. Q3 Major challenges experienced over the last 12 months – Country notes | |
---|---|
Australia |
|
Austria | The major challenge remains cash flow forecasting and to manage the changes with regards to Austria’s funding needs as budgetary developments around COVID-19 remain volatile. |
Belgium | The overall funding needs are turning out to be very close to initial estimates. Detailed cashflow forecasting has remained challenging in a year where the economy and fiscal revenue improved drastically, but costs linked to the pandemic remained very high. |
Canada | The Government of Canada has decreased its planned gross issuance by $81 billion compared to last fiscal year, from $593 billion (FY2020-21) to $512 billion (FY2021-22). Similar bond auction sizes in the long end of the curve and decreased bond auction sizes in the medium to short-term bonds have amounted to $286 billion for the gross bond issuance, down by $88 billion compared to $374 billion (FY2020-21). A significant proportion of extraordinary borrowings to date in 2021-22 has consisted of short-term instruments, mainly treasury bills as the “shock absorbers”, given the ability to issue these instruments in volume quickly to raise needed funding. By the end of the fiscal year, the treasury bill stock is expected to be $226 billion, about $7 billion higher than the level at the end of 2020-21. The Bank of Canada has also launched several measures and facilities to support well-functioning markets, including increasing the amount of Government of Canada securities it purchases at treasury bill auctions and bonds in secondary markets. These facilities have been very important in maintaining well-functioning markets in Canada. Canada is taking a prudent approach to financing the deficit by adding a third objective to its debt management strategy to significantly increase long-term bonds to lock in funding at historically low interest rates. This will ensure Canada’s debt remains affordable and sustainable for future generations and less vulnerable to increases in interest rates. |
Chile |
|
Colombia |
|
Costa Rica |
|
Czech Republic | Czech Republic faces monetary policy interest rate hikes by central bank (Czech National Bank). Czech National Bank increased 2W repo rate from 0.25% to current 1.50% in three steps in 2021 and additional hikes are expected. This environment strongly influences government bond yields, which are increasing since the beginning of 2021, with negative impact to state debt service. Short end of the yield curve is more sensitive to monetary policy interest rate hikes, while yields on the long end of the yield curve are increasing with the lower pace resulting in flat yield curve of government bonds in this time. Czech Republic is taking steps to inclusion of the Czech government bonds denominated in EUR and issued on domestic market under Czech law among the eligible assets under Eurosystem credit operations (ECB eligibility). Relatively time consuming process due to ECB additional assessment procedure of the CSD Prague to the CSDR regulation. |
Denmark | Uncertainty related to the government’s funding needs has been higher than usual. |
Estonia |
|
Finland |
|
France |
|
Germany | We did not perceive any major risk factors/events affecting our primary market operations. In year 2 of the COVID-19 pandemic the adjusted funding strategy and new communication formats are already in place and are working properly / are well received in the market |
Greece |
|
Hungary |
|
Iceland |
|
Ireland | Markets continued to face volatility as the Covid-19 pandemic evolved and financing forecasts needed to change throughout the year as needs changed. |
Israel |
|
Italy | Please refer to the answer to the point 4. |
Japan |
|
Korea |
|
Latvia |
|
Lithuania |
|
Luxembourg |
|
Mexico (local market debt) | Local Market Debt The greater challenges for the local debt market in the last 12 months have been the foreign capital outflows for 200 billion pesos (~10 bn USD), the local and global inflation growing adjustment, and the uncertainty of the central bank monetary policy decisions, which increases the complexity of issuing. Particularly, the central bank monetary policy decisions have been crucial in the development of local debt market curves. Due to their inflation evolution perspectives and the Central Bank’s monetary policy decisions in the current year (some of them surprising participants), participants are more cautious, therefore making careful movements in their positions. |
Mexico (external market debt) | External Market Debt Most of this volatility was related to the hike seen in the US references rates through the first quarter 2021 (the 10-year rate increased 83 basis points from January 1st to March 31st while the 30-year rate increased 81 basis points from January 1st to March 18th). However it’s very important to mention that despite of all this volatility Mexico’s market risk perception (measured by the spread between the US 10-year rate and Mexico’s 10-year US dollar denominated bond) has maintained stable; currently this measure it’s at a level of 143 basis points, which means an increase of only 3 basis points on a YTD basis. Given that the local market faced several disruptions given the circumstances derived from the pandemic, the Federal Government intended to satisfy its needs with external market financing. |
Netherlands |
|
New Zealand |
|
Norway | Lack of investor demand led to a very poor auction result in early June 2021. Consequently, we changed to auction terms allowing us in special situations to allot a lower volume than the pre-announced sales volume. |
Poland |
|
Portugal |
|
Slovak Republic | Issuance plans of Slovakia must be in line with prudent Act on Fiscal Responsibility (Debt Brake). |
Slovenia | Due to the COVID-19 crisis the government’s funding needs increased significantly. Besides, the pandemic development is difficult to predict which requires higher attentiveness in debt management. |
Spain | Operational challenges: It’s worth highlighting that we were subject to an extreme weather event (Filomena storm), which made it impossible to reach the location where auctions are usually carried out. The pandemic also posed operational issues, having to work from home for many operations that were normally done in-person. All this has tested our procedures and proven that we can indeed carry out our issuance with great success (both through auctions and syndications) both remotely and in-person, even in the most difficult of circumstances. Changes in government’s funding needs: This was especially relevant in 2020, where the government’s needs varied drastically from initial projections. In 2021 a conservative estimate was put forth, due to the uncertainty brought about by the pandemic, which was later revised downward. |
Sweden |
|
Switzerland | The funding needs of the Swiss government changed throughout the year due to the unpredictable nature of the pandemic. The pandemic and its impact on the funding needs were – and still are – linked to great uncertainty (e.g. what and when the government will decide; how the economy will respond; whether the government can meet its higher financing needs without negative effects on its financing conditions; how increased government funding needs will affect the financing conditions of other market participants). This led to challenges in cash flow forecasting and in the communication with fiscal and monetary authorities on the one hand and in the communication with the markets on the other. The communication with market participants was especially challenging as the funding needs of the government changed throughout the year. In order to achieve the Federal Treasury’s goal of maintaining a constant and reliable market presence, a trade-off had to be found between transparency and maintaining the necessary flexibility to adjust the funding plan. At the end of the first quarter, the expected government expenditures for the year 2021 increased sharply due to the second wave of the pandemic and the corresponding countermeasures to soften the economic impact. For this reason, the Treasury significantly increased its issuance target. After the summer, it became clear that the financing needs of the government would be smaller than previously thought (lower expenditures, higher tax revenues). Therefore, the Treasury had to lower its issuance target. |
Turkey |
|
United Kingdom | There have been some unusually large revisions to the DMO’s financing requirement, including large increases in financing in the period due to the government’s response to the COVID-19 pandemic, as well as an unusually large reduction in April 2021 as the government’s cash needs decline from the peak level seen in 2020. In the context of challenging conditions in the sterling money markets, the DMO has also worked closely with HM Treasury and the Bank of England to identify ways in which the DMO’s cash management responsibilities can be further supported. |
Table A.11. Q4 Major risk factors/events faced in the last 12 months | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
COVID-19 pandemic’s risks on a global basis | COVID-19 pandemic’s risk on a national basis | Global financial risks | Local financial risks | Political risks | Changes in the government’s borrowing needs | Materialization of contingent liabilities including state guarantees | Liquidity risk | Revisions to the financial regulations | Operational risks | Cyber risk | |
Australia | X | X |
|
|
| X |
| X |
| X |
|
Austria | X | X |
|
|
| X |
|
|
|
|
|
Belgium | X | X |
|
|
|
|
|
|
| X | X |
Canada |
| X | X |
|
| X |
|
|
| X |
|
Chile | X | X |
|
|
| X |
|
|
|
|
|
Colombia | X | X | X |
|
|
|
| X |
| X |
|
Costa Rica | X | X |
|
|
|
|
|
|
|
|
|
Czech Republic | X | X |
|
| X | X |
|
|
| X |
|
Denmark | X | X |
|
|
| X |
|
|
|
|
|
Estonia |
| X |
|
|
| X |
|
|
|
|
|
Finland | X | X |
|
|
| X |
|
|
|
|
|
France | X | X |
|
|
|
|
|
|
|
|
|
Germany |
| X |
|
|
| X |
|
|
|
|
|
Greece | X | X | X | X |
| X |
|
|
|
|
|
Hungary | X | X | X |
|
| X |
| X |
|
|
|
Iceland | X | X |
|
|
| X |
| X |
|
|
|
Ireland | X | X |
|
|
| X |
|
|
|
|
|
Israel | X | X | X | X | X | X |
| X |
|
|
|
Italy | X | X | X |
| X | X |
|
|
|
|
|
Japan |
| X |
|
|
| X |
|
|
| X |
|
Korea | X | X | X |
|
| X |
|
|
|
|
|
Latvia | X | X | X |
|
| X |
|
|
|
|
|
Lithuania | X | X |
|
| X | X |
|
|
| X |
|
Luxembourg |
| X |
|
|
| X | X | X |
| X |
|
Mexico (local market debt) | X | X | X | X | X | X |
| X |
|
|
|
Mexico (external market debt) | X | X | X | X | X | X |
| X |
|
|
|
Netherlands | X | X |
|
|
| X |
|
|
| X |
|
New Zealand | X | X |
|
| X | X |
|
|
|
|
|
Norway | X |
| X |
|
| X |
|
|
|
|
|
Poland | X | X | X |
|
| X |
|
|
| X |
|
Portugal | X | X | X |
|
| X |
|
|
|
|
|
Slovak Republic | X | X | X |
| X | X |
|
| X |
|
|
Slovenia | X | X |
|
|
| X |
|
|
|
|
|
Spain | X | X |
|
|
| X |
|
|
| X |
|
Sweden | X | X | X |
|
| X |
|
|
|
|
|
Switzerland | X | X |
|
|
| X | X | X |
| X |
|
Turkey | X | X |
|
|
|
|
| X |
| X |
|
United Kingdom | X | X | X |
|
| X |
|
|
| X |
|
Total | 33 | 37 | 16 | 4 | 8 | 33 | 2 | 10 | 1 | 14 | 1 |
Table A.12. Major risk factors/events which might affect your operations in the next 12 months | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
COVID-19 pandemic’s risks on a global basis | COVID-19 pandemic’s risk on a national basis | Global financial risks | Local financial risks | Political risks | Changes in the government’s borrowing needs | Materialization of contingent liabilities including state guarantees | Liquidity risk | Revisions to the financial regulations | Operational risks | Cyber risk | |
Australia | X | X |
|
|
| X |
|
|
| X | X |
Austria |
| X | X |
|
| X |
|
|
|
|
|
Belgium | X | X | X |
|
|
|
|
|
| X | X |
Canada |
| X | X |
|
| X |
|
|
| X |
|
Chile |
|
|
|
|
|
|
|
|
|
|
|
Colombia |
|
| X |
| X |
|
|
|
| X |
|
Costa Rica |
|
| X |
| X | X |
|
|
|
|
|
Czech Republic | X | X | X |
|
| X |
|
|
| X |
|
Denmark |
|
|
|
|
|
|
|
|
|
|
|
Estonia |
| X |
|
|
| X |
|
|
|
|
|
Finland |
|
| X |
|
| X |
|
|
|
|
|
France | X | X | X |
| X |
|
|
|
|
|
|
Germany |
|
| X |
|
| X |
|
|
|
|
|
Greece | X | X | X | X |
| X | X | X |
|
|
|
Hungary | X | X | X |
| X | X |
| X |
|
|
|
Iceland | X | X |
|
|
| X |
| X |
|
|
|
Ireland | X | X | X |
| X |
|
|
|
|
|
|
Israel | X | X | X | X | X | X |
|
|
|
|
|
Italy | X | X | X |
| X | X |
|
|
|
|
|
Japan |
| X |
|
|
| X |
|
|
| X |
|
Korea | X | X | X |
| X | X |
|
| X |
|
|
Latvia | X | X | X |
| X | X |
|
|
|
|
|
Lithuania | X | X |
|
| X | X |
|
|
| X |
|
Luxembourg |
|
|
|
|
|
|
|
|
|
|
|
Mexico (local market debt) | X | X | X | X |
| X |
| X |
|
|
|
Mexico (external market debt) | X | X | X | X |
| X |
| X |
|
|
|
Netherlands | X | X | X |
|
| X |
|
|
| X | X |
New Zealand | X | X |
|
|
| X |
|
|
|
| X |
Norway |
|
| X |
|
|
|
|
|
|
|
|
Poland | X | X | X |
|
| X |
|
|
| X |
|
Portugal | X | X | X |
|
| X |
|
|
|
|
|
Slovak Republic | X | X | X |
| X | X |
|
| X |
|
|
Slovenia | X | X | X |
| X |
|
|
|
|
|
|
Spain | X |
|
|
|
|
|
|
|
|
|
|
Sweden | X | X | X |
| X | X | X |
|
|
| X |
Switzerland | X | X | X |
|
| X | X | X |
| X |
|
Turkey | X | X |
|
|
| X |
| X |
| X |
|
United Kingdom | X | X | X |
|
| X |
|
|
| X |
|
Table A.13. Q4 Specified OTHER major risk factors/events that might affect the DMO operations in the next 12 months | |
---|---|
Australia |
|
Austria |
|
Belgium |
|
Canada |
|
Chile | Specify (i): |
Colombia |
|
Costa Rica |
|
Czech Republic |
|
Denmark |
|
Estonia |
|
Finland |
|
France |
|
Germany |
|
Greece |
|
Hungary |
|
Iceland |
|
Ireland |
|
Israel |
|
Italy |
|
Japan |
|
Korea |
|
Latvia |
|
Lithuania |
|
Luxembourg |
|
Mexico (local market debt) | Specify (i): inflation convergence, (ii) monetary normalization |
Mexico (external market debt) | Specify (i): inflation convergence, (ii) monetary normalization |
Netherlands |
|
New Zealand |
|
Norway |
|
Poland |
|
Portugal |
|
Slovak Republic |
|
Slovenia |
|
Spain |
|
Sweden |
|
Switzerland |
|
Turkey |
|
United Kingdom |
|
Table A.14. Q4 major risk factors/events that your DMO faced last 12 months or might affect your operations in the next 12 months – Country notes | |
---|---|
Australia |
|
Austria |
|
Belgium | The main uncertainties remain linked to the further evolution of the pandemic. If the current economic expansion continues and the pandemic remains under control, monetary policies and inflation expectations may indeed change which could lead to higher borrowing costs. Throughout the pandemic, the change in the work situation has been a very important new element but the setup with still a lot of work from home continues to function well. Staffing can become more challenging in a rapidly improving economic context. Cyber risks remain a point of attention. |
Canada | COVID-19 has caused a significant disruption in the Canadian economy. Real GDP fell by a record 13 per cent over the first half of 2020. Activity in Canada declined about three times as much as in the 2008-09 recession, in a much shorter time. The average of private sector economic forecasts released as part of the Budget 2021 expect the real GDP to rebound from a contraction of 5.4 per cent in 2020 to growth of 5.8 per cent in 2021 and 4 per cent in 2022, a faster recovery than the growth rates of, respectively, 4.8 per cent and 3.2 per cent projected in the November 2020 Fall Economic Statement. Based on the Fiscal Projections in the Budget 2021, a budgetary deficit of $121.2 billion is expected for 2021-22 (6.4 per cent of GDP versus 16.1 per cent of GDP in 2020-21). While this year’s deficit estimate is still high compared to historical levels, it is in line with the fiscal response to the COVID-19 pandemic deployed by Canada’s peer countries and was necessary to avoid a more significant economic impact and prolonged economic and fiscal challenges. A fourth or fifth wave of COVID-19 could cause further changes to the Government of Canada’s borrowing needs if additional response is needed to support the Canadian economy and individuals as was the case with the previous waves of COVID-19. |
Chile | Uncertainty derived from the pension system, and the consequences that it could have on the investor demand |
Colombia |
|
Costa Rica |
|
Czech Republic |
|
Denmark |
|
Estonia |
|
Finland |
|
France | In the next 12 months, the main risk we foresee would be a more rapid than anticipated normalization of ECB monetary policy (even if unlikely). Resurgence of the pandemic whether at national or international level remains a risk. |
Germany |
|
Greece |
|
Hungary |
|
Iceland |
|
Ireland | Impact of the Covid-19 pandemic |
Israel |
|
Italy | Despite 2021 has been marked by a strong recovery of economic activity, the evolution of the COVID-19 pandemic has continued to represent a risk factor. Moreover, the uncertainties regarding the trend of inflation and the attitude of central banks in the coming months, have led to an increase in volatility on all securities markets, including of course the government segment, especially in the second half of the year. On the other hand, the maintenance of the Central Banks' purchase programmes (APP and PEPP) contributed to the consolidation of a constructive climate in financial markets. At a national level, the completion of the SURE programme and the launch of the Next Generation EU programme together with the stability of the national political framework, the strong growth of Gross Domestic Product for the current year and the good prospects for next year – which, among other things, have made it possible to anticipate the decline in the debt/GDP ratio -, have contributed decisively to maintaining low levels of volatility and to limit the increase of yield curve for Italian government securities. |
Japan |
|
Korea |
|
Latvia |
|
Lithuania |
|
Luxembourg |
|
Mexico (local market debt) | The response to this question is not split into local and external debt. |
Mexico (external market debt) | The response to this question is not split into local and external debt. |
Netherlands |
|
New Zealand |
|
Norway | Norwegian interest rates are highly correlated with foreign interest rates. Sudden international events related to monetary policy as well as asset purchasing programs can therefore affect the demand for Norwegian government bonds significantly. |
Poland |
|
Portugal |
|
Slovak Republic |
|
Slovenia |
|
Spain | Given the high vaccination rate in Spain, we do not expect significant Covid-19 risks on a national level for Spain in the next 12 months. However, if other countries suffer problems in the next 12 months, this could affect Spain’s economy, and therefore our role as a DMO. |
Sweden |
|
Switzerland | The risks over the next 12 months will mainly be the same as the risks that arose during the pandemic and were relevant in 2020 and 2021. In addition to the challenges described in question 3 (e.g. higher funding needs, operational challenges, uncertainty), there is still a risk that a prolonged pandemic could lead to mass defaults in the corporate sector which in turn could trigger a financial crisis. This could lead to the materialization of contingent liabilities and further fiscal policy measures and therefore lead to an even higher need for government borrowing. Ultimately, this could lead to a liquidity risk, if the cash buffer of the Treasury were to be depleted. Because Switzerland is a small and open economy, developments abroad also play a major role. At present, there are no indicators that predict this chain of events and the risk gets less likely as the pandemic gets under control. Nevertheless, it is important to monitor signs of these risks and to react quickly if they should materialize (e.g. by keeping a sufficient liquidity buffer). |
Turkey |
|
United Kingdom | The DMO is mindful of the impact that the COVID-19 pandemic may still have both in terms of how the size of the financing requirement may evolve over the next year and how this will affect the design and implementation of the financing programme. The DMO’s Exchequer cash management responsibilities may also be impacted given uncertainties over the borrowing profile in the next year in a context where there are known challenges in the period ahead (e.g. large gilt redemptions). |
Table A.15. Q5 How do you manage these risks (e.g. contingency funding plans, continuity plan etc.)? | |
---|---|
Australia | The AOFM’s usage of short-term financing continues to significantly be higher than pre-2020 levels. |
Austria | The Republic of Austria mitigates funding risks with its diversity of funding sources and instruments as well as financial flexibility due to its scarcity. We also try to spread issuances over the year in order to minimize concentration risk and diversify interest rate risk. |
Belgium | We have business continuity plans that are regularly reviewed and updated. In terms of funding there is a close follow-up of fiscal revenue and spending in order to gauge the outcome of overall funding needs. Throughout 2021, because of large funding transactions early in the year (including SURE loans), we have held larger cash positions than usual. |
Canada | · The Government of Canada employs an open and collaborative approach for its debt management function. Actions such as publishing market notices, which act as information communiques containing operational details, and/or new program announcements, have been effective. Senior government officials have also effectively communicated changes in funding needs and information on programs and operations during public appearances/speeches. This approach has helped to ensure the well-functioning of the Government of Canada markets and favorable conditions for market liquidity in both the primary and secondary Government of Canada securities markets. In addition, new programs and changes to existing programs that have been announced by the Government to support key financial markets to ensure that they continue to function properly have been well received by market participants and primary dealers (PDs). Given the government’s unprecedented borrowing requirements due to COVID-19, Government officials have also communicated directly to PDs in order to reinforce PDs significant role in Government of Canada Debt Distribution Framework (DDF) in helping to manage the huge increase in Government issuance and providing secondary market liquidity to the GoC market. Being open and transparent in the communication strategy with PDs has also been an effective approach to motivating dealers to provide liquidity to the market and to support primary market issuance. The following are three examples of Canada’s transparency in communication with financial market participants: Publication of the quarterly bond schedule prior to the start of each quarter in advance of auctions Publishing details for each operation in a call for tender a week prior to the auction Regular consultations with market participants: The Government of Canada and the Bank of Canada seek the views of government securities distributors, institutional investors, and other interested parties on issues related to how the Government of Canada securities market is performing and views for the design and operations of the domestic debt program. |
Chile | There is still a strong space in the external market, as well as a capacity of the local market to absorb short-term instruments. When the local appetite reduced, the DMO increased the issuances in the external markets and reduced the tenor of LC issuances (up to 10 years). When the appetite for long maturities reduced, the DMO decided to issue more T- Bills. |
Colombia | Though manuals and procedures when applicable. |
Costa Rica | The indicated risks are managed by defining an annual financing plan or strategy, with access to external financing (loans and Eurobonds issuance), in addition by prefunding the Government's cash flow and by adopting spending containment measures. and fiscal rule. |
Czech Republic | Risks arising from domestic or global financial markets are managed operatively by flexible debt issuance strategy, which is published for following year and updated in the mid-term (quarterly in extraordinary cases). Additionally, the decisions related to gross issuance are discussed and approved by the Ministry of Finance management every quarter. Ministry of Finance also keeps sufficient liquidity buffer within single treasury accounts and forecasts future state debt service expenditure on high percentile. |
Denmark | Increased government funding demand and increased uncertainty concerning government finances was mitigated by expanding the funding base to foreign issuance, both CPs and EMTN |
Estonia | In order to mitigate the risk of changes in government’s borrowing needs, a minimum liquidity requirement was introduced and committed credit facilities with the main local partner banks were established already in 2011. The minimum required level of the liquidity position equals the State’s six-month negative net cash flow comprising: transactional requirements, meaning the excess of budgeted monthly outgoings over budgeted revenue (also taking into account entities such as the Health Insurance Fund and the Unemployment Insurance Fund whose cash management is consolidated with central government), including debt and interest payments during the next one-month period, and precautionary requirements, representing an estimate of the deterioration in budgeted tax revenues over the following six months in the event of an economic downturn of the severity experienced in 2009 and a provision for liabilities from guarantees given by the State that are expected to crystallise in the following six months. The actual liquidity position is calculated as (a) the Liquidity Reserve (deposits with maximum three months maturity, current accounts and bonds, liquid and high-grade) plus (b) undrawn amounts from facilities committed for at least the following three months (by banks). These facilities also serve to mitigate operational risks and to ensure that unexpected large outgoing payments can be made without having to liquidate investments. Borrowing strategy document was introduced in 2020 and is updated regularly. |
Finland | For operational risk process guidelines and checkpoints. There are also contingency and continuity plans. |
France | Cash buffer and flexibility on the short term funding programme. |
Germany | Our issuance planning and market entrance allows for adjustments during the year. Short-term changes can, amongst others, be addressed by our bill instruments. |
Greece |
|
Hungary | Flexible issuance plan, contingency plans, communication with market participants, prefinancing. |
Iceland | Our auction program will have to be adapted to higher funding needs of the government due to consequences of the pandemic. The issuance plan has to be more flexible, more series will be issued and the maximum size of each series has been increased. |
Ireland | Large cash balance in place, plan issuance schedule around known events |
Israel | Our funding plans include several scenarios, and for each scenario we carefully built a detailed plan of action and several contingency plans. |
Italy | The Italian Treasury funding plan is inspired by the principles of transparency and predictability. In order to handle possible risks deriving from a national and international geopolitical scenario, the funding strategy is oriented toward managing interest-rate and refinancing risks, so as to continue to keep exposure to such risks under control. Moreover, the Italian treasury has focused its debt management policy in increasing the average life of the debt to mitigate the risk of refinancing by diluting over time the volumes to place on the market and to decrease the issuer’s exposure to sudden increases in interest rates. However, the above-mentioned factors are characterized by a level of uncertainty which makes difficult to predict their evolution over time. Therefore, the Treasury funding strategy keeps a sufficient degree of flexibility in order to quickly response and adapt its funding plan to the evolution of the market context, as occurred during the Covid-19 crisis. |
Japan | In the case of rapid changes in fiscal demands, we will adjust the amount of front-loading Refunding Bonds in order to mitigate additional impacts on the JGB market. Also, we will deal with a decline in market liquidity through Liquidity Enhancement Auction, an additional issuance of off-the-run bonds. |
Korea | Contingency plan |
Latvia | We use pre-funding approach, maintaining liquidity buffer, to keep flexibility in context of issuance timing, terms and conditions, etc. We regularly review and update the total funding requirement and adjust the borrowing activities if necessary |
Lithuania | When redeeming major (equivalent to EUR 1 billion and above) Eurobond issues, the risks are mitigated by allocating the required funds in advance. Also we can use the reserve (stabilization) fund for the debt redemptions. The taken amount must be returned to the fund within few years. Thus, we have high cash buffers or liquidity cushions, actively seek to reduce operational risk. |
Luxembourg | contingency funding plans |
Mexico (local market debt) | The response to this question is not split into local and external debt. Given that the pandemic remains a latent risk, the Federal Government has a contingency plan and can continue its payment and non-market related operations remotely without the need of daily on-site work. |
Mexico (external market debt) | The response to this question is not split into local and external debt. Given that the pandemic remains a latent risk, the Federal Government has a contingency plan and can continue its payment and non-market related operations remotely without the need of daily on-site work. |
Netherlands | Funding plans are drafted with sufficient flexibility to deal with unexpected changes, whilst at the same time maintaining sufficient predictability for investors. Interest rate risk is kept at acceptable levels through targets for the average time to refixing and the 12-month refixing rate of the portfolio. Operational risks are managed through business continuity plans among others. Liquidity risk is mitigated through maintaining a sizeable money market and having the option to store cash at the central bank. |
New Zealand | Liquidity risk – As a result of our experience during the COVID-19 pandemic we have undertaken work to quantify the size of a larger, enduring liquidity buffer. We maintain a buffer of high quality liquid assets and also have a limited overdraft facility with the Central Bank if there are unforeseen funding needs in the short-term. We also have the option to increase Treasury Bill and ECP issuance in the short-term. COVID-19 pandemic risk – we take a long-term structured approach to our funding strategy, rather than trying to tactically respond to short-term market dynamics. Our intention is to provide as much certainty as possible and thereby reduce the uncertainty or illiquidity premiums that are applied to our bonds. Over the long-term we believe this will place us in the best possible position in the backdrop of global financial risks that are beyond our control. Political risks – we avoid syndications around the timing of elections. We emphasise to investors the continuity of fiscal prudence between parties, and that the strengths of the NZ sovereign rating are independent of a particular political party. Change in Government borrowing needs – we review the borrowing programme forecasts at two scheduled points during the year. Last year we were also able to seek out-of-cycle approval from the Minister of Finance to change the borrowing programme. |
Norway |
|
Poland | Holding a cash buffer, flexibility in terms of issuance: instruments, markets, issuance techniques. Maintaining the relations with investors and developing the investor base. Emergency procedures are updated on a regular basis taking into account new types of security issues. Technical infrastructure allowing for running debt management processes from outside of the Ministry of Finance building is assured. |
Portugal | When preparing the financing plan for the year, potential risk factors are taken into account, therefore we anticipate as much as we can the financial schedule aiming to comfortably raise the funds to cover not only the year needs but also prefunding at least 30% of the following year gross funding needs and/or execute liability management exercises with the cost of debt reduction and smooth of redemption profile objectives. We also have contingency funding plans – e.g. we can launch new financial instruments directed to local retail market at short notice if need be. |
Slovak Republic | Sufficient liquidity buffer (currently higher than long-term average). |
Slovenia | These risks are managed by DMO maintaining the flexibility under the scope of annual funding plan, which in turn enables a swift response when needed. Bonds with short term residual maturity were offered for buy-back in 3Q 2021 in order to decrease refinancing risk in the following two years. |
Spain | When preparing our yearly funding strategy we take all these risks into account. Therefore, the net funding goal takes possible risk factors into account, providing us with a conservative estimate, given the information available at the time. Moving on to the actual execution of our funding plan, one of the ways we can manage possible risks (especially the high degree of uncertainty associated to the pandemic), is by front-loading our issuance. This was something done by many DMOs, including ourselves. The idea is that by front-loading our issuance, we avoid saturating the market later in the year, if it becomes necessary to increase our funding needs. |
Sweden | The Debt Office´s strategy to meet a rapidly changing borrowing need is to initially handle with short term funding (adjusting T-bill issuance, CP and bonds in foreign currency) and then gradually adjusting the borrowing in long term funding. It is also important to have different borrowing methods (auction, syndications, private placements) and maintain short-term funding market (T-Bills, repos). |
Switzerland | The Treasury develops its auction calendar and issuance program in close cooperation with the budgetary units of the Ministry of Finance. In addition, the issuance program is revised on a quarterly basis and, if necessary, adapted according to the funding needs of the government. These updates are also approved by the Asset & Liability committee of the Treasury, on which – among others – the budgetary units and the Swiss National Bank are represented. With this rolling planning, potential risk factors can be taken into account for the issuance program and at each quarterly adaption. Thanks to this process and the relatively large liquidity buffer (see Q11), there is enough time and flexibility to adapt the funding strategy in a timely manner should risks materialize. |
Turkey | Debt and Risk Management Committee closely monitors and evaluates recent changes in global, local markets and budget realizations and government borrowing needs. With respect to these developments, if needed, the Committee determines new strategies for debt management. Regarding operational risks, we manage our operations according to our Operational Risk and Business Continuity Management frameworks. On the other hand, to manage pandemic related risks while ensuring business continuity; flexible and remote working arrangements had been continued until June 2021. As a result of the high vaccination rate and the decline in the spread of coronavirus, working arrangements in public sector got back to normal as of July 2021. Besides, Turkish Treasury has an emergency and business continuity plan to deal with the operational risks since 2011. The BCP is updated annually and whenever deemed necessary. In that regard, at the beginning of the pandemic, we updated the BCP in 2020 to cover the case of a pandemic, revised the critical roles, the skills needed to fulfil these positions, and replacements/substitutes for key individuals. |
United Kingdom | In order to try and manage some of these risks (as set out in the table in question 4), the UK DMO has a longstanding predictable approach to debt issuance, providing as much transparency to the market about our supply plans as possible. We aim to provide timely updates on the quarterly issuance calendar following market consultation, and with respect to the timing of syndicated offerings, in particular. This approach has served the DMO and the market well, supporting gilt market functioning and smooth price adjustment. In addition, we regularly consult with the market about current demand conditions before confirming our detailed plans for the period ahead; this gives scope to reflect market feedback (e.g. about shifts in demand conditions) into our issuance programme on a regular basis. With respect to ‘contingency funding’ (for example, the rapid increase in financing required as a result of the COVID-19 pandemic), we scaled up the size of our syndications and increased the frequency and average size of our auctions. We adapted to the changing market conditions by increasing issuance across the curve, including shorter-dated gilts (e.g. 3-year maturity); doing so was an essential component of the programme necessitated as a means to help deliver a rapidly increasing borrowing requirement. With effect from 7 April 2020, we also increased the post auction option facility rate from 15% to 25% with the intention to provide to auction participants a greater incentive to participate in operations. Within cash management, we increased Treasury Bill issuance at certain points in the pandemic. We regularly review our business continuity plan to ensure that it remains fit for purpose, in particular, to mitigate against the risk that we might be unable to hold an operation due to some unforeseen circumstance. |
Table A.16. Q6 Do you consider potential risk factors when preparing your financing plan (e.g. auction calendar)? | |||
---|---|---|---|
Yes | No | Comment | |
Australia | X |
|
|
Austria | X |
| In general, potential risk factors (e.g. forthcoming elections, geo-political events, central bank meetings etc.) and competing supply are considered when preparing the financing plan. The RAGB and ATB auction calendar dates are announced in December for the forthcoming year in order to maintain the highest possible degree of predictability. We tend to stick to these calendar dates regardless of potential risk factors. However, we have flexibility with regards to the amount and bond(s)/bill(s) issued at each auction (which for bonds is announced on Thursdays in the week before the auction) depending on demand and market conditions. At bond syndications we have more room to adjust in function of known upcoming events. In 2022 we plan introduce a quarterly funding outlook to increase transparency and predictability. |
Belgium | X |
| In terms of the auction programs we maintain the highest possible degree of predictability. For syndications we do of course have more liberty to adjust in function of known upcoming events. |
Canada | X |
| Flexibility is built in our financing plan to adjust to lower or higher financial requirements (e.g., contingency planning). The quarterly bond schedule (auction calendar) is designed to ensure that there are no auctions taking place on the same days as the interest rate announcement dates in Canada and in the US. The potential impact of public speaking engagements of members of the Governing Council of the Bank of Canada is also considered and utmost care is utilized to avoid inadvertent impact on Government of Canada primary market auctions. Call for tenders for primary market auctions are released in the morning (instead of the afternoon) in the week before an auction week when the markets are closed for a long weekend (i.e. a national/provincial holiday). The auction calendar also provides information on the specific sector of the to-be auctioned security and total amounts maturing on the auction day (across other securities). Market participants are closely consulted as part of the process of developing the debt management strategy. To support a liquid and well-functioning Government of Canada securities market, the Government strives to promote transparency and regularity. |
Chile | X |
|
|
Colombia | X |
|
|
Costa Rica | X |
|
|
Czech Republic | X |
| Financing plan is prepared in accordance with financing needs, state budget deficit development, state treasury development, internal forecast and last but not least with situation on domestic and foreign bond markets and primary dealers’ demand. In the internal forecast Ministry of Finance takes into account relevant financial risks arising from the situations on global and local financial markets (i. e. estimate of expenditure on state debt service in particular years), political risk related to state debt management and expenditure on state debt service (state debt level, expenditure level) etc. |
Denmark | X |
| Issuance is spread out over the year to reduce event risk. |
Estonia | X |
| For a small country like Estonia it is essential to be prepared for different funding alternatives (multilateral loans, revolving lines, t-bills, bonds) |
Finland |
| X | Annual funding plan is based on a baseline scenario |
France | X |
| We take into account the most likely annual trajectory of our financing programme and try to smooth it by running a buybacks programme and sizing the t-bill programme. |
Germany | X |
| We tried and try to consider (avoid) days of foreseeable high volatility / uncertainty while preparing our annual auction calendar. |
Greece | X |
|
|
Hungary | X |
| We do that by making the financing plan rather flexible. The auction calendar used to be fixed until 2019 for the given calendar year, but since it then it can be changed within a year as well. The Debt Management Office (DMO) has flexibility in determining the offered amounts and the accepted amounts at the auctions, and it has other tools such as the non-competitive top-up phase after the auctions; all these help to adjust the financing by wholesale instruments. Short-term liquidity management instruments (mainly repos) are available for handling temporary situations and a sizeable cash buffer is also held on the Treasury Single Account and in Foreign Exchange (FX) deposits. The annual amount of FX bond issuance is also flexible in the financing plan, depending on the government’s financing needs and the demand for local government securities. All these measures have been in effect for many years, and were revised and enhanced in the past two years due to the Covid pandemic. |
Iceland | X |
| The goal is to maintain a high degree of predictability in the auction program. An auction calendar is published in December each year for the following year and a quarterly auction plan is published before the start of each quarter. A degree of flexibility is attained in the financing plan by the amount issued in each auction. |
Ireland | X |
| Auctions are announced quarterly. Consideration is given to known market events which may influence auction outcomes. |
Israel | X |
|
|
Italy | X |
|
|
Japan | X |
| We put our focus on predictability of issuance in formulating annual JGB Issuance Plans. One of the tools for this end is front-loading issuance of Refunding Bonds, which allows us to avoid concentration of bond redemption in a specific year and easing volatility in the amount of JGB market issuance across fiscal years. For instance, when it is predictable that bond redemption will be concentrated in a certain fiscal year, which could lead to a sharp rise in the issuance of Refunding Bonds, the amount of JGB issuance across fiscal years can be levelled by issuing front-loading Refunding Bonds in a year before the concentration. Thus, front-loading issuance of Refunding Bonds can serve to address market impacts volatile fiscal needs may have. |
Korea | X |
|
|
Latvia | X |
| During the COVID-19 and uncertainties caused by the pandemic, acknowledgment and monitoring the risks is very important (for example: budget execution and fiscal impact of the pandemic, general trends in markets, investor interests, general market expectation of rate development etc.) |
Lithuania | X |
| Potential risk factors are considered to some extent, however, we publish our auction calendar for three months in advance and auction details 5 working days in advance, so we have little flexibility to react if markets open in a bad shape on the day of the auction. We tend to manage risk by adjusting the borrowing amounts if needed. |
Luxembourg | X |
|
|
Mexico |
|
| The response to this question is not split into local and external debt. The Annual Borrowing Plan and Quarterly Securities Auction Calendars are designed taking into account potential risk factors. The auction calendars are flexible in order to respond to changes in demand from local and foreign investors, as well as cash flow needs in the treasury account. |
Netherlands | X |
|
|
New Zealand | X |
| We take a strategic approach to our bond tender issuance, pre-announcing the full details of the auction calendar a month in advance. We avoid scheduling auctions: • On the day of meetings of the Reserve Bank of New Zealand (RBNZ), • On the day of significant fiscal announcements such as the Budget or release of Crown accounts, • During the New Zealand summer holiday period, where there is the risk of low participation. By contrast, the precise timing of syndications are based on a tactical assessment of when will provide optimal investor participation. Potential risk factors are considered in detail when choosing a date. We also maintain flexibility for the volume of Treasury Bill tender issuance by announcing the volumes and maturities the day prior to the tender. |
Norway | X |
| Issuances in both bills and bonds are spread over the year. An auction calendar for the whole year is published in December the preceding year. The normal auction amount in reopenings is NOK 2-3 billion. Should we experience any challenges in covering the auctions, we might consider increasing the number of auctions and reduce the volume in each auction. Auctions may also be cancelled. |
Poland | X |
| In the annual auction calendar, the dates of the auctions are planned on days when there are no decisions of central banks (ECB, Fed, NBP) nor rating agencies' decisions regarding Poland. In monthly plans, the offer of domestic T-bonds at auctions is adjusted on an ongoing basis to the current and forecast market and budget situation. |
Portugal | X |
| IGCP does not have a defined auction calendar for T-Bonds (PGB). Instead, there are two issuance windows per month (2nd and 4th Wednesday of each month) and on the Friday of the week preceding the auction date we confirm (or not) the tender and announce the lines to be opened and the target size for the auction. |
Slovak Republic | X |
| Potential risk factors are very important in Syndicate deals with large expected volumes to be sold. In regular auctions the risks are less important. We prepare the auction calendar (dates of the auctions) for the whole year and try to avoid any changes or cancelations. We announce particular type of the offered bonds in the auctions only few weeks before the auction, following the actual demand/feedback from the PD and investors |
Slovenia | X |
|
|
Spain | X |
| We do not vary our auction calendar dates, because we consider having a regular issuance calendar to be crucial. However, given the large amount of auction dates, our auction calendar provides us with ample flexibility to adapt to these potential risk factors. When preparing our funding strategy, we do take these risks into account, as mentioned in the previous response. |
Sweden | X |
| There continues to be great uncertainty about how the budget balance will develop in the future, but the Debt Office is well prepared for both increased and decreased borrowing. If the borrowing requirement in the short term is smaller than forecast, the Debt Office can allow funding within liquidity management to decrease or further reduce the T-bill borrowing. If the borrowing requirement becomes larger and it is not considered appropriate to further increase borrowing local currency (Swedish Krona), the Debt Office can borrow in foreign currency, both in bonds and commercial paper. |
Switzerland | X |
| See Q5. |
Turkey | X |
| We share the main framework of the yearly borrowing plan through the Treasury Financing Program announcement. Throughout the year, in the end of each month further details on the auction calendar are shared in the 3-month borrowing strategy. During the preparations of each announcement, Debt Office receives monthly and yearly risk assessments from the Risk Department. These assessments include simulation based analyses that are carried out in order to assess the cost - risk profile of the debt stock and to design the main debt management policy of the Turkish Treasury. In addition to those quantitative assessments, other qualitative potential risk factors, like geo-political or operational, are also considered during the final evaluation stage. |
United Kingdom | X |
| The key high level risks taken into account from the debt management perspective when preparing the annual financing remit are: interest rate risk, refinancing risk, inflation risk, liquidity risk and execution risk. An assessment of these risks (alongside an assessment of cost and the pattern of demand) will impact the skew of issuance both between nominal and inflation-linked gilts and, within conventional gilt issuance, the split between maturities. The assessment can also impact the number, type, size and scheduling of gilt operations. With respect to some of the larger risks cited in the table above (e.g. local/global financial risks and changes to monetary conditions), we simply aim to adapt to any changes in market conditions as appropriate, after consultation with a wide range of market counterparties. |
Total | 35 | 1 |
Table A.17. Q7 How has the maturity structure of your 2021 issuances changed compared to 2020? | |||
---|---|---|---|
LONGER on average | SHORTER on average | Around the same | |
Australia |
| X |
|
Austria | X |
|
|
Belgium | X |
|
|
Canada | X |
|
|
Chile |
| X |
|
Colombia | X |
|
|
Costa Rica |
| X |
|
Czech Republic | X |
|
|
Denmark | X |
|
|
Estonia |
| X |
|
Finland |
|
| X |
France | X |
|
|
Germany |
| X |
|
Greece | X |
|
|
Hungary | X |
|
|
Iceland |
|
| X |
Ireland | X |
|
|
Israel |
| X |
|
Italy | X |
|
|
Japan |
| X |
|
Korea | X |
|
|
Latvia | X |
|
|
Lithuania | X |
|
|
Luxembourg |
|
| X |
Mexico (local market debt) |
| X |
|
Mexico (external market debt) | X |
|
|
Netherlands |
|
| X |
New Zealand | X |
|
|
Norway |
|
| X |
Poland | X |
|
|
Portugal | X |
|
|
Slovak Republic | X |
|
|
Slovenia |
|
| X |
Spain | X |
|
|
Sweden |
|
| X |
Switzerland |
|
| X |
Turkey | X |
|
|
United Kingdom | X |
|
|
Total | 22 | 8 | 8 |
Table A.18. Q7 maturity structure of your 2021 issuances – country notes | |
---|---|
| Country notes |
Australia |
|
Austria |
|
Belgium | After stabilizing the average maturity of the debt portfolio over the past years, we decided to further extend the average maturity of the debt portfolio again in 2021. |
Canada | The Government of Canada manages its funding plan according to the annual Debt Management Strategy (DMS) which is legislated to be tabled within 30 sittings days of the beginning of the fiscal year. The Government of Canada’s fiscal year-end is March 31. The funding plan for fiscal year 2021-22 was released in April 2021 and can be found here: https://www.budget.gc.ca/2021/report-rapport/anx2-en.html As Canada moves towards economic recovery, the shift towards long-term debt issuance, which began in 2020-21, will continue. Funding more COVID-19-related debt through long-term issuance will help provide security and stability to the government balance sheet by lowering debt rollover while remaining fiscally prudent. Issuances with a maturity of 10 years or greater will be higher in 2021-22 than 2020-21 in both relative and absolute terms. As part of this move towards longer-term issuance, the government will re-open issuance of the ultra-long 50-year bond for 2021-22. Before the pandemic, 15 per cent of the bonds issued by the government were issued at maturities of 10 years or greater. Over the course of 2020, federal government allocations of long bonds rose to about 29 per cent. The government is now proposing to increase that proportion to 42 per cent. Over the next three years, the average term to maturity for Government debt is expected to increase to nearly 8 years, a level that is significantly higher than the historical average of 5.9 years seen in the period from 1981-82 to 2019-20. |
Chile | The participation in the external market also increased (from 20% of the total stock to 30%, approx.). The effect on maturity was partially compensated by the decision to issue in longer maturities in the external markets. |
Colombia | The average life of our debt increased from 8.69 years in August 2020 to 9.62 years in August 2021. In January 2021 we issued our first 40 year bond in the international markets. |
Costa Rica |
|
Czech Republic | Czech Republic aims to issue instruments with longer maturities due to flat yield curve of CZK-denominated government bonds. Average time to maturity of newly issued government bonds in 2021 is 8,6 years, average time to maturity of the state debt is 6,6, which represents increase by 0,4 year compared to the end of 2020. On the other hand, Ministry of Finance has started to use stabilization repo operations on money market in higher extent aiming to short-term funding and strengthening of liquidity reserves. |
Denmark | In 2021 the outstanding amount in the short-term papers, in particular the commercial paper programmes, have been reduced gradually. |
Estonia | Risk for higher borrowing need did not materialize and pre-funding in 2020 allowed the DMO to issue T-bills instead of bonds to cover the uncertainty of 2021 cash-flow. |
Finland |
|
France | Issuances on bonds have raised by 1 year on average in 2021 (from 11,6 to 12,6 years year to date) |
Germany | Issuance volumes* 2020: € 237 bn capital market (excl. April issuances into own holdings), € 181 bn money market vs. 2021 (plan): € 256.4 bn capital market (excl. ILB volume to be auctioned on 2 November 2021), € 238 bn money market *incl. syndicates and issuance volumes of conventional twins into own holdings |
Greece |
|
Hungary |
|
Iceland | ATM of the portfolio decreased in 2020 by approximately 1 year, but has remained more or less the same during 2021. |
Ireland |
|
Israel |
|
Italy | Market conditions and management decisions made it possible to continue increasing the average life of debt which, at the end of 2021, relative to the stock of government bonds, was equal to 7.11 years (7.29 years including loans under the SURE and NGEU programs), a figure higher than that at the end of 2020 equal to 6.95 years. This was attributable to various issues on the long end of the yield curve, carried out both through auctions and with the launch - through a placement syndicate - of several new nominal benchmark securities (10-year, 15-year, 20-year and 50-year BTPs plus the BTP Green maturing in 2045). |
Japan | Compared with the JGB Issuance Plan for FY2020 (Initial), the JGB Issuance Plan for FY2021 (Initial) increased offering for almost every maturities of bonds by biggest-ever amount, but it increased mostly offering for short-term bonds. This is because in FY2020 the Issuance Plan increased its amount significantly, especially of short-term bonds, which resulted in increasing issuance amount of Refunding Bonds in the Issuance Plan for FY2021 (Initial). Overall, the average maturity of JGBs (flow-basis) was shortened from 9 years 3 months (FY2020 (Initial)) to 6 years 10 months (FY2021 (Initial)). In addition, compared with the average maturity of JGBs (flow-basis) in FY2020 (3rd Supplementary Budget), the average maturity of JGBs (flow-basis) was lengthened from 6 years 8 months (FY2020 (3rd Supplementary Budget)) to 6 years 10 months (FY2021 (Initial)). |
Korea |
|
Latvia |
|
Lithuania | Average maturity in auctions increased from 12.6 years in 2020 to 13.1 years in 2021 YTD. |
Luxembourg |
|
Mexico (local market debt) | Average time to maturity (ATM) for local debt has reduced (and ATM for foreign debt has increased). In the average, the ATM of all market debt remains around the same. |
Mexico (external market debt) | (Average time to maturity (ATM) for local debt has reduced and) ATM for foreign debt has increased. In the average, the ATM of all market debt remains around the same. |
Netherlands | In 2020 we started to gradually shift money market funding to capital market funding (since money market funding was quite high following the covid crisis). This process has continued in 2021. The term structure of capital market funding has however stayed relatively stable in 2020 and 2021, with a focus on long maturities (between 10 and 30 years) while at the same time maintaining sufficient liquidity across the entire curve. |
New Zealand | We extended the length of the nominal bond curve from 20-years to 30-years in September 2021. There is a lower funding requirement in 2021 relative to 2020. This has meant less emphasis on issuing volume into short-dated bonds where domestic demand is assured and allowed us to issue more mid to longer-dated bonds. |
Norway |
|
Poland | The average maturity increased from slightly less than 6 years to more than 7 years. |
Portugal | IGCP launched a new 30 year benchmark in February 2021 that significantly increased the average maturity of MLT debt issuance in 2021 compared to 2020. |
Slovak Republic |
|
Slovenia | In 2021 Slovenia issued two 10-year lines in the total amount of €2.75bn. Nevertheless, it also issued a 60-year bond (€0.5 bn), which is the longest maturity issued ever. All in all, we would still opt for the answer “Around the same”. |
Spain | This lengthening of our maturity structure is in line with the trend the Spanish Treasury has followed in recent years, seeking to lengthen the maturity of our issuance, without causing a significant increase in the cost of issuance. The low interest rate environment of the past years has been helpful in this regard. |
Sweden |
|
Switzerland | The bonds issued in 2021 (new issuance, reopenings, own tranches sold) had a time to maturity of 13.8 years; this is around the same as in the previous year (14.3 years). The amount of outstanding bills did also not change compared to 2020. |
Turkey | We have comparatively more relied on 5 and 10 year fixed-rate bond issuances in 2021 and switched shorter-term bonds with longer-term bonds. At the end of 2020, 12-month moving average maturity of domestic borrowing was 37.2 months (switch auctions included), as of August 2021, this ratio has dramatically increased up to 56.5 months (switch auctions included). |
United Kingdom | The skew of issuance, which shows the amount of issuance of short (1-7 years), medium (7-15 years) and long nominal gilts (15+ years) as well as that of inflation-linked gilts is decided on a financial year basis. The maturity structure of issuance in 2020-21 involved a larger proportion of short debt than issuance in 2021-22 to-date. This reflects the unprecedented size of the financing programme last year, which necessitated very large increases in short issuance in order to raise the required amount of cash in the period (i.e. short-dated auctions require a lower level of risk to be absorbed by the market relative to longer-dated issuance and, therefore, auction sizes can be larger, other things equal). In 2020-21 the weighted average maturity of issuance was 14.3 years, whereas in 2021-22, as at end-September 2021, the weighted average maturity of issuance stands at 16.1 years. |
Table A.19. Q8 Have you changed your funding strategies during 2021 compared to any original 2021 funding plan? | ||
---|---|---|
Yes | No | |
Australia |
| X |
Austria | X |
|
Belgium |
| X |
Canada |
| X |
Chile | X |
|
Colombia |
| X |
Costa Rica |
| X |
Czech Republic | X |
|
Denmark | X |
|
Estonia | X |
|
Finland |
| X |
France |
| X |
Germany |
| X |
Greece |
| X |
Hungary | X |
|
Iceland |
| X |
Ireland |
| X |
Israel | X |
|
Italy | X |
|
Japan |
| X |
Korea | X |
|
Latvia | X |
|
Lithuania | X |
|
Luxembourg |
| X |
Mexico (local market debt) | X |
|
Mexico (external market debt) | X |
|
Netherlands |
| X |
New Zealand | X |
|
Norway |
| X |
Poland |
| X |
Portugal | X |
|
Slovak Republic | X |
|
Slovenia |
| X |
Spain | X |
|
Sweden | X |
|
Switzerland | X |
|
Turkey | X |
|
United Kingdom |
| X |
Total | 20 | 18 |
Table A.20. Q9 How have you adapted your funding strategies and operations in response to the pandemic in last 12 months? | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|
Number or volume of issuance of securities across the yield curve | Issuance of money market instruments | Introducing new maturity lines | Issuing new types of securities | Auction calendar | Frequency of auctions | Post-auction option facility | Use of syndications | Use of private placements | Others | |
Australia | Higher | Higher | Yes | No | No | Higher | Not applicable | Higher | Not applicable | Not applicable |
Austria | Higher | Higher | No | Yes | No | No change | No change | No change | Higher | Please select |
Belgium | Lower | No change | Yes | No | No | Lower | No change | Lower | No change | No change |
Canada | No change | Higher | No | No | Yes | No change | Not applicable | No change | No change | Not applicable |
Chile | Lower | Higher | Yes | Yes | Yes | Lower | No change | Higher | Not applicable | Not applicable |
Colombia | No change | No change | Yes | Yes | Yes | No change | No change | Lower | No change | Not applicable |
Costa Rica | No change | No change | No | No | No | No change | Not applicable | Not applicable | Not applicable | Not applicable |
Czech Republic | Higher | Higher | Yes | No | Yes | Higher | No change | No change | No change | Higher |
Denmark | Higher | Higher | Please select | No | No | No change | Not applicable | Not applicable | Not applicable | Higher |
Estonia | Lower | Higher | Not applicable | Not applicable | Not applicable | Lower | Not applicable | Lower | Not applicable | No change |
Finland | No change | No change | No | Not applicable | Yes | No change | Not applicable | No change | Lower | Not applicable |
France | No change | Higher | No | No | No | Higher | No change | Higher | Not applicable | Please select |
Germany | Higher | Higher | No | No | Yes | Higher | Not applicable | Lower | Not applicable | Higher |
Greece | Higher | Lower | Yes | No | Yes | No change | No change | Higher | No change | No change |
Hungary | Higher | Lower | Yes | Yes | Yes | Lower | No change | Higher | Not applicable | Higher |
Iceland | No change | No change | Yes | No | No | No change | No change | No change | Not applicable | Higher |
Ireland | Please select | Please select | Yes | Please select | Please select | Higher | Please select | Higher | Higher | No change |
Israel | Lower | Lower | No | No | Yes | No change | Not applicable | Not applicable | Not applicable | Not applicable |
Italy | Higher | Higher | Yes | Yes | No | No change | Higher | Higher | No change | Higher |
Japan | Higher | Lower | No | No | Not applicable | Not applicable | Not applicable | Not applicable | Not applicable | Not applicable |
Korea | Higher | Not applicable | Yes | No | Yes | No change | Higher | No change | No change | Higher |
Latvia | Higher | No change | Yes | Yes | Yes | Higher | Not applicable | No change | Not applicable | Not applicable |
Lithuania | Higher | No change | No | No | Yes | No change | No change | No change | No change | No change |
Luxembourg | Higher | Not applicable | Yes | Yes | Not applicable | Not applicable | Not applicable | Higher | Not applicable | Not applicable |
Mexico (local market debt) | Lower | Higher | Yes | No | Yes | No change | No change | No change | Not applicable | No change |
Mexico (external market debt) | Higher | Not applicable | Yes | Yes | Not applicable | Not applicable | Not applicable | No change | Not applicable | Not applicable |
Netherlands | Higher | Lower | Yes | No | No | Higher | No change | Not applicable | Not applicable | Not applicable |
New Zealand | Lower | Lower | Yes | No | No | No change | Not applicable | Lower | Not applicable | No change |
Norway | No change | No change | No | No | No | No change | Not applicable | No change | Not applicable | Not applicable |
Poland | No change | Lower | No | No | No | No change | No change | No change | Lower | No change |
Portugal | Lower | Lower | Yes | No | No | Lower | No change | Higher | No change | Not applicable |
Slovak Republic | Higher | No change | Yes | No | Yes | Higher | No change | No change | No change | Please select |
Slovenia | Higher | Lower | Yes | Yes | Yes | Lower | Not applicable | No change | No change | Not applicable |
Spain | No change | No change | Not applicable | No | No change | No change | No change | Higher | No change | No change |
Sweden | Higher | Higher | Yes | No | No | No change | Not applicable | Higher | Not applicable | Not applicable |
Switzerland | Higher | No change | Yes | No | No | No change | Not applicable | Not applicable | Not applicable | No change |
Turkey | Higher | No change | No | No | No | Higher | No change | No change | Please select | Please select |
United Kingdom | Higher | Lower | Yes | Yes | Yes | Higher | Not applicable | Higher | Not applicable | Higher |
Total: Higher | 21 | 12 | 10 | 2 | 12 | 2 | 8 | |||
Total: Lower | 7 | 10 | 6 | 0 | 5 | 2 | 0 | |||
Total: No change | 9 | 12 | 19 | 17 | 15 | 12 | 10 | |||
Total: Yes | 23 | 10 | 16 | |||||||
Total: No | 12 | 25 | 16 |
Table A.21. Q9 How have you adapted your funding strategies and operations in response to the pandemic – Country notes | |
---|---|
Australia |
|
Austria |
|
Belgium | This compares 2021 to 2020. The funding needs are significantly lower than in 2020 due to a combination of lower primary (fiscal) cash needs (although this will mostly be visible in the last months of the year) and lower debt redemptions. |
Canada | N/A |
Chile |
|
Colombia | In June 2021, we introduced a new bond due 2031 (10 year), to our local auctions. In September 2021, we issued our fist green bond through auctions in the local bond market following the structure of twin bonds with the recently launched 10 year tenor. |
Costa Rica |
|
Czech Republic | Financing needs increased due to the crisis state budget deficit, which was increased from CZK 320 billion to CZK 500 billion in February as part of amendments to the Act on the State Budget in response to the ongoing SARS-CoV-2 coronavirus pandemic and also taking into account the effects of the amendment to the Income Tax Act effective from 1 January 2021. |
Denmark |
|
Estonia | On contrary to the forecast in 2020 there has been no need to issue bonds. Due to better liquidity, only T-bills have been used. |
Finland |
|
France | One more auction in August |
Germany | The changes for 2021 in response of the pandemic were already included in the auction calendar for 2021, published in December 2020. On balance at year-end 2021, there will be only a very small adaption (€ 0.5 bn) of total issuance volume, compared to this planning. This adaptation as well as the introduction of new green maturities (5Y and 30Y) was not linked to the pandemic. |
Greece |
|
Hungary | Frequency of auctions was increased at first in 2020, then lowered back to the original frequency in 2021. |
Iceland | Use of non-marketable funding increased. |
Ireland |
|
Israel |
|
Italy | Since the outbreak of the Covid-19 epidemiological crisis, in order to manage the increase of the funding needs, the Italian Treasury has made recourse to some element of flexibility in issuing procedures: Increase of both the amount offered at auctions and the shares of the supplementary placements reserved to the Specialists; Use of syndicated placement also for the launch of new benchmark securities with maturity ≤10 years; Introduction of a new modality to issue one or more off-the-run securities through the electronic trading system (“TAP ISSUE”). Issuance of retail instruments (BTP Italia and BTP Futura) specifically dedicated to finance the provisions adopted by the Government related to Covid-19 crisis. Even if not directly related to the response to the Covid-19 crisis, other two important changes in finding strategy occurred in 2021 has been: the introduction of the repurchase agreement (Repo) activity, which generated positive effects both in terms of efficiency in the collection of liquidity and in the management of distortions in the market. For the purposes of executing Repos with the aim of collecting liquidity, the Treasury has set up its own portfolio, composed of tranches of Government securities already in circulation in the nominal BTP segment. This portfolio will be periodically updated to adjust its composition and quantities in line with cash management needs and take into account the full implementation of Repo operations. Given the levels of market rates, for the first months of activity, the Treasury operated on the Repo market only in funding. However, as of 2022, the Treasury could have recourse to the Repo market also for liquidity use. The launch of the first Green BTP, the Italian government security dedicated to financing expenditure incurred by the State with a positive environmental impact, as provided for by the Italian Budget Law for 2020. Following the publication of the Green Bond Framework and the related Second Party Opinion, the syndicated issue of the first tranche of the BTP Green with maturity 30 April 2045 took place on 3 March, for an amount of 8.5 billion, of which more than half was subscribed by ESG (Environmental, Social and Governance) investors. |
Japan | Comments on “Issuance of money market instruments (i.e. T-Bills and repos) compared to issuance of long-term bonds”; The shares of short-term bonds in the market issuance amount for FY2020 (2nd Supplementary Budget) was lower than those for FY2021 (Initial). |
Korea |
|
Latvia | Pandemic in general globally together with uncertainties and inflation expectation impacted investors demand for certain tenors at particular time of the offering. Taking into account the flexibility of the borrowing strategy, Latvia used the strategy to raise funding with such bond tenors that created as low as possible burden on debt servicing costs to the budget. |
Lithuania |
|
Luxembourg |
|
Mexico (local market debt) |
|
Mexico (external market debt) |
|
Netherlands |
|
New Zealand | Over the past 12 months, funding requirements have been lower and reduced relative to expectations in early 2020. As a result, tender volumes have been lower (although over the same number of bond lines) and we have undertaken fewer syndications. That said, these are both well above pre-COVID times, with multiple new bond lines now being introduced per annum (compared to 0-1 previously). |
Norway |
|
Poland |
|
Portugal | In 2021 the execution of the funding program was according with the initial plan until July. In August and September, two T-Bill auctions were canceled and an expected T-Bond auction window in September was not used, mostly due to a better budget execution and instalments received under the NGEU program. |
Slovak Republic |
|
Slovenia | Please note that changes in “Auctions” apply to treasury bill auction. |
Spain | We have used more syndications to be able to decide on how our bond issuance is allocated among investors. This allows us to find investors who are more likely to contribute to stable secondary market prices. This is especially useful given the uncertainties brought about by the Covid-19 global crisis. Regarding our green bond issuance, we have just issued our first green bond, but this issuance is not related to the pandemic. It’s more related to Spain’s general green goals and the Spanish Treasury’s aim to diversify its issuance instruments and investor base. Regarding our post-auction options, as mentioned in one of the initial paragraphs, we made a change to the price at which our green-shoe option is allocated. However, this change was done more than 12 months ago. |
Sweden | In the beginning of the pandemic during the spring of 2020, The Debt Office increased the funding lines of T-bills. We also introduced a 50-year bond via syndication in June 2021. |
Switzerland | There was no reason to fundamentally adjust our approach to funding. Thanks to our reliable issuance strategy and the frequent auctions in the money and capital markets, we can react quickly to increasing funding needs without introducing new instruments. Therefore, we did not introduce any new instruments or techniques and there are no plans to do so in the next 12 months. We changed the targeted issue volume several times due to high uncertainty (increases and decreases) There was an increased use of existing instruments (own tranches) and especially in the beginning of the pandemic a higher than usual share of T-Bills compared to T-Bonds. |
Turkey | The effects of the pandemic on the government’s financing needs in 2020, led us to increase the level and adjust the composition of the borrowing. In this context the share of short-term, CPI-indexed, TLREF-indexed and foreign currency bonds in the overall domestic borrowing composition was increased. On the other hand, in 2021, also thanks to the gradual alleviation of the effects of the pandemic on government budget and financing dynamics, we have been able to increase substantially the average maturity of domestic borrowing and the share of 5 and 10 year fixed-rate bonds in the overall borrowing composition. Moreover, according to our up-to-date financing program, we plan to borrow much less than the amount envisaged in the original annual financing program. |
United Kingdom | Our funding strategy has remained consistent despite the unprecedented financing requirements – in historical terms – last year and in 2021-22. As set out previously, auctions remain the primary issuance method for us, with syndications remaining an important issuance method alongside to deliver a minority of the financing programme. The UK’s decision to issue green gilts was not driven by the pandemic, rather by the UK Government’s commitment to a green transition. However, financing raised via green gilt issuance will contribute to the meeting the overall financing requirement. |
Table A.22. Q10 Have you observed any changes in investors behaviour in participating in auctions or/ Syndications (e.g. oversized orders)? | |
---|---|
Australia | Behaviour in syndications and tenders over the past 12 months was broadly similar to the 12 months previous to that. Breakdowns of investor participation in syndications and tender statistics are available here https://www.aofm.gov.au/data-hub |
Austria | In 2020 the average bid/cover ratio at government bond auctions was 2.81x and reached its highest value since 2005. In 2021YTD the bid/cover ratio normalized with an average value of 2.26x (until October), close to its long-term average of 2.3 (2009-2021YTD). At syndicated bond issuances oversubscription was 8.1 in 2020 (=second highest value ever recorded) and 8.2 in 2021YTD (=highest value ever recorded). |
Belgium | We haven’t observed any changes in auctions. In the syndications, we continue to witness the phenomenon of increasing order books that we have seen since -especially- 2018. |
Canada | The increase in volatility seen at the beginning of the pandemic seems to have dissipated. Government of Canada Bond auctions across sectors as well as Treasury Bill auctions are performing well, with auction performance metrics returning to historical long-term average levels. Being open and transparent in the communication strategy with primary dealers has been an effective approach to motivating dealers to provide liquidity to the Government of Canada securities market and to support primary market issuance. Investors’ continue to participate in Government of Canada securities auctions across the curve. Canada’s reputation as a high-quality issuer of Government securities has remained strong in the investor community through the crisis period. Overall, no significant changes in investor behavior have been observed. |
Chile | No |
Colombia | From April to August Colombia has had positive net inflows from foreign investors. |
Costa Rica | No greater has been observed in the patterns of investors, in general, it has been possible to reduce the interest rate in all the terms. |
Czech Republic | In the first half of this year Ministry of Finance decided to utilize unusually high demand for government bonds and pre-financed all state debt redemptions this year, even before expected interest rate hikes by Czech National Bank. |
Denmark | Demand from investors were lower in certain periods with market turmoil during the covid-19 pandemic. |
Estonia | Improvement of competition in T-bills auction. |
Finland | Fast money orders in syndications continue to be somewhat inflated |
France | We have noticed an increased participation and order size for hedge funds and fast money investors. No specific change in auctions |
Germany | In general, there is currently a high demand for green securities. |
Greece | Yes, there was a tremendous increase in investors demand and appetite for sovereign bonds. |
Hungary | No changes in this regard |
Iceland | No significant change observed. |
Ireland | No significant change |
Israel | No specific change |
Italy | During the past syndicated transactions, in some circumstances we have noted an inflated amount of orders coming from fast money accounts that could misrepresent the underlying value of the book. |
Japan | Auction participant’s behavior such as “successful Bids Share for JGBs by Investor type”, “ratio of bid” at the time of auctions has not changed in particular. |
Korea |
|
Latvia | Yes, at certain periods of the year the demand for longer tenor was limited due to the market expectations for rates increase |
Lithuania | No significant changes |
Luxembourg | Even more oversubscription than we usually have |
Mexico (local market debt) | Local Market Debt Foreign investors are currently focusing on instruments on the long-end side of the curve, revealing preferences for 10 and 30 years bonds on the run. Retirement fund managers are currently increasing the demand for inflation-linked bonds in the short-side of the curve. Participants have shown higher demand for floating rates instruments. Additionally, some local participants have shown a preference for liquidity, demanding instruments on the short-side of the curve. The overall volume and liquidity have been decreasing. |
Mexico (external market debt) | External Market Debt No changes have been observed in investors’ behavior regarding debt issuances in international financial markets. Opposite to the local market, there has been a steady demand all across the curve, compressing differentials against US treasure curve in line with CDS performance. |
Netherlands | No, we have not observed any changes in investor behaviour |
New Zealand | No. |
Norway | With the exception of one auction, investor demand has been unchanged from previous years. As regards syndications, there is a tendency by some market segments to place oversized orders. |
Poland | No, average bid/cover ratio did not change significantly. |
Portugal | IGCP has witnessed significant large orders in syndications, mostly from hedge funds accounts. This behavior leads a certain difficulty in assessing the quality of the demand and consequently to set the final price for new issuance. |
Slovak Republic | We observed higher presence of hedge funds or fast money investors in Syndicate books. |
Slovenia | The order books/bids are significantly oversubscribed. |
Spain | Similarly to other sovereign issuers, we have noticed larger orders from certain investors in our syndications. |
Sweden | No change |
Switzerland | - For our T-Bills, the investor demand depends mainly on the prices of the last few auctions and the cross currency basis. This has not changed during the pandemic. The demand for our bonds depends on a number of factors (amount of other issuers, absolute yield, relative valuation compared to peers, current interest rate development, etc.). Because of this, it is sometimes difficult for us (and for other market participants) to predict the level of demand for certain maturities in the days before an auction. However, this is also not limited to the period of the pandemic. For both the bills and the bonds, the bidders/counterparties at the auctions have mostly been the same as before the pandemic. |
Turkey |
|
United Kingdom | It has been reported to us anecdotally and we have observed oversized orders placed at syndicated offerings (i.e. where bidders submit bids that are larger than the amount they want/expect to be allocated in the transaction). We understand though that this is not unique to the UK. We have communicated to our primary dealers that we do not find this approach to submitted orders to be helpful, in that it may make allocations more difficult for the dealers themselves, whose responsibility it is to decide the allocations based on the DMO’s high level steer. |
Table A.23. Q11 Do you have a liquidity buffer? | |||
---|---|---|---|
Yes | No | Have there been any changes in the last 12 months in terms of your liquidity buffer practice? Also has there been any problems in managing or communicating the use of the liquidity buffer? | |
Australia | X |
| The AOFM sets a minimum target asset balance, this amount has reduced slightly over the last 12 months in response to somewhat reduced government outlays. The AOFM also generally holds a minimum of around 4 weeks of net government outlays and debt refinancing requirements across the year. |
Austria | X |
| In the past Austria did not have a liquidity buffer. This changed in mid-March 2020 due to the uncertainties around the exact cash flows surrounding the Austrian government corona package. |
Belgium |
| X | We typically do not hold a formal liquidity buffer. However, in 2021 the liquidity we held was higher than usual (cf 5) |
Canada | X |
| There have been no changes to the liquidity buffer practice since the announcement of the Prudential Liquidity Management plan in the March 2011 Federal Budget. Please refer to: https://www.budget.gc.ca/2011/plan/anx2-eng.html The liquidity plan is composed of government deposits held with financial institutions and the Bank of Canada, as well as the liquid foreign exchange reserves and are managed to provide one month's worth of coverage. Government cash balances in both 2020 and 2021 are running significantly higher than in comparison to 2019, largely because of anticipation of large funding requirements for COVID-19 programs that were announced by the Government of Canada in the first half of 2020. The Government temporarily increased the frequency and size of treasury bill auctions in H1 2020 and ramped up bond issuances. This has resulted in larger cash balances than were previously carried in 2019. |
Chile | X |
| The liquidity buffer is nor formally established, although in practice, there are Treasury assets, maintained to cover short term expenses. The amount of these assets has reduced due to the pandemic. |
Colombia | X |
|
|
Costa Rica |
| X |
|
Czech Republic | X |
| Since March the Ministry is active on the money market, with the aim of preventively strengthening the liquidity reserves of the CZK state treasury, when it successfully tested a new financing channel in the form of stabilization repo operations with maturities from 2W up to 3M (mainly 2W) with collateral mainly in the form of T-Bills. Czech Republic obtains CZK funds for 2W period at key monetary policy rate (2W CNB repo rate). |
Denmark | X |
| The Danish DMO holds a minimum cash buffer. The targeted cash buffer has not changed. |
Estonia | X |
| There have been no changes in our liquidity buffer practice. The liquidity buffer is the financial buffer used for the State’s daily cash flow management to deal with normal mismatches of cash inflows and outflows within a month. Liquidity was increased by the DMO due to the uncertainty of cash-flow connected to COVID-19 crisis in H1 2020. |
Finland | X |
| A lower buffer than in 2020 but still higher than before that |
France | X |
| We increased our cash buffer following the crisis and decreased it in 2021. |
Germany | X |
|
|
Greece | X |
|
|
Hungary | X |
| The targeted optimal liquidity buffer level was raised and the achieved TSA balance is even higher. The Hungarian Debt Management Office restarted cash placements in the market via repos in 2021 (these were suspended in April 2020), but with relatively low amounts. |
Iceland | X |
| The pandemic has caused higher funding need of the government. The funding strategy has changed consequently with more emphasis on issuing short term bonds and T-bills. These measures have resulted in a more “stable” liquidity buffer. |
Ireland | X |
| No |
Israel | X |
| No changes in our liquidity buffer practices. We didn't use it during Covid-19. |
Italy | X |
| Any change in our liquidity buffer practice has not been introduced in the last 12 months. |
Japan | X |
| The fund balance on the Government Debt Consolidation Fund (GDCF) has decreased by reducing the amount of front-loading Refunding Bonds according to the 3rd revision of the issuance plan for FY2020. |
Korea | X |
|
|
Latvia | X |
| Increased liquidity buffer is maintained due to additional funding needs to manage risks and mitigate fiscal impact of Covid-19 pandemic. No problems in managing or communicating the use of the liquidity buffer was observed. |
Lithuania | X |
| No changes |
Luxembourg | X |
| no |
Mexico (local market debt) | X |
| The response to this question is not split into local and external debt. It has remained the same, there has not been any changes in our liquidity buffer. The Treasury has a minimum liquidity threshold that helps as a contingency buffer. Also, Mexico has access to the IMF’ Flexible Credit Line and other International Financial Institutions resources. Regarding the short-term zero coupon bonds, there is always a buffer in order to capture more resources; furthermore, zero coupon bonds are on a range and they are communicated to participants on a weekly basis. |
Mexico (external market debt) | X |
| The response to this question is not split into local and external debt. It has remained the same, there has not been any changes in our liquidity buffer. The Treasury has a minimum liquidity threshold that helps as a contingency buffer. Also, Mexico has access to the IMF’ Flexible Credit Line and other International Financial Institutions resources. Regarding the short-term zero coupon bonds, there is always a buffer in order to capture more resources; furthermore, zero coupon bonds are on a range and they are communicated to participants on a weekly basis. |
Netherlands | X |
| Temporarily the restraints on storing cash at the central bank have been relaxed. |
New Zealand | X |
| Our liquidity buffer is materially larger than prior to the COVID-19 pandemic, to help manage funding and liquidity risk. The compliance requirements for the liquidity buffer has not yet been revised but we are currently quantifying the enduring level of the liquidity buffer. We plan to provide further guidance on this at future Economic and Fiscal Updates. |
Norway | X |
| No changes |
Poland | X |
| Due to extraordinary budget and market uncertainty the level of cash buffer was increased. |
Portugal | X |
| The increase in volatility of government revenues and expenditures since March 2020 has put additional pressure on cash forecasting activities. Although IGCP was anticipating the increase in cash deposits at the end of 2020 to help in managing 2021 uncertainty, the cash excess surpassed the target significantly. As result, the execution of 2021 funding program needed to be adjusted (meaning reduce net issuance). |
Slovak Republic | X |
| The liquidity buffer due to COVID19 increased. We have an ongoing internal debate about the sufficient size of liquidity buffer. There is a political challenge to correctly communicate higher gross debt increase vs. smaller increase of net debt. Potentially higher liquidity buffer than optimal due to overshooting cash deficit forecasts by the Ministry of Finance. |
Slovenia | X |
| Slovenia has a significant liquidity buffer. The issue with managing liquidity buffer is negative interest rates. Communicating the use/size of the liquidity buffer is usually not a problem. |
Spain | X |
| Given the large amounts of Government Spending and Tax Revenues that Spain carries out, and the possibility of cashflow/time mismatches, the Spanish Treasury always maintains a liquidity buffer to avoid cashflow tensions. In the last 12 months there have been two factors that have increased the need for this liquidity buffer: The higher uncertainty brought about by pandemic-related changes in Tax Revenues or Government spending. The implementation of the NGEU program. On the one hand, Spain must pay for NGEU related projects. On the other hand, Spain receives disbursements from the grant component of NGEU. It’s possible that cashflow mismatches may arise, which would require a liquidity buffer. |
Sweden |
| X |
|
Switzerland | X |
| Since the introduction of negative interest rates by the Swiss National Bank in 2015, the liquidity buffer has grown steadily and reached a year-end volume of around CHF 20 to 25 billion (between a quarter and a third of the yearly budget of the federal administration). Thanks to this high liquidity buffer, the Treasury had sufficient time to adapt the issuance strategy and increase the issuance activity slowly and without causing additional market stress. As a result of the pandemic, the liquidity buffer has decreased and we forecast it to reach around CHF 10 billion at the end of the year. This would be in line with our liquidity target. One key lesson of the pandemic was, that we can add liquidity quickly thanks to our well-established T-Bills program and that there is no need for an oversized liquidity buffer (opportunity costs). |
Turkey | X |
| Keeping a strong level of cash reserve in order to reduce the liquidity risk associated with cash and debt management is one the main pillars of our borrowing strategy. |
United Kingdom |
| X | N/A |
Table A.24. Q12 Please indicate areas of key lessons learned from the COVID-19 crisis. | ||||||
---|---|---|---|---|---|---|
The need to hold excess cash balances as a buffer | Need to maintain short-term funding market | Having different borrowing methods | Established communication with investors | Yield curve extension | Others | |
Australia | X | X | X | X | X |
|
Austria |
| X | X | X |
|
|
Belgium |
|
| X |
|
|
|
Canada | X | X |
|
| X |
|
Chile | X | X | X | X | X |
|
Colombia |
| X | X | X | X |
|
Costa Rica | X | X | X | X |
|
|
Czech Republic |
| X |
| X | X |
|
Denmark |
|
|
|
|
| The benefit of having a broad and diversified market access, including in foreign currency. |
Estonia |
| X | X | X | X |
|
Finland | X | X | X | X |
|
|
France | X | X | X | X |
| Being able to work on remote |
Germany |
| X | X |
|
|
|
Greece | X | X | X | X | X |
|
Hungary | X |
| X | X | X |
|
Iceland | X | X |
|
|
|
|
Ireland | X | X | X |
|
|
|
Israel | X | X | X | X |
|
|
Italy |
|
| X | X | X |
|
Japan |
|
|
| X |
|
|
Korea |
| X |
| X |
|
|
Latvia | X |
| X |
|
| Keep available also other funding options, like international financial institutions and utilize when necessary and if financially favourable borrowing conditions are offered |
Lithuania |
|
| X | X |
|
|
Luxembourg | X | X |
|
|
|
|
Mexico (local market debt) |
| X | X | X | X | Use of liquidity buffers (trust funds) |
Mexico (external market debt) |
| X | X | X | X | Use of liquidity buffers (trust funds) |
Netherlands |
| X | X | X |
|
|
New Zealand | X | X | X | X |
|
|
Norway |
| X | X | X |
|
|
Poland | X | X | X | X |
|
|
Portugal | X | X |
|
| X | Existence of a business continuity/recovery plan to fall back toin case of need |
Slovak Republic | X | X | X | X |
|
|
Slovenia | X | X | X | X | X |
|
Spain | X | X | X | X |
|
|
Sweden |
| X | X | X |
|
|
Switzerland | X | X |
| X |
|
|
Turkey | X | X |
| X |
|
|
United Kingdom |
| X | X | X |
|
|
Total | 21 | 31 | 28 | 29 | 13 | 6 |
Table A.25. Q13 Do you plan to review the long-term funding strategy as a consequence of increased debt levels following the COVID-19 pandemic? | ||
---|---|---|
Yes | No | |
Australia | X |
|
Austria |
| X |
Belgium |
| X |
Canada | X |
|
Chile | X |
|
Colombia |
|
|
Costa Rica |
| X |
Czech Republic |
| X |
Denmark | X |
|
Estonia |
| X |
Finland |
| X |
France |
| X |
Germany |
|
|
Greece | X |
|
Hungary | X |
|
Iceland | X |
|
Ireland | X |
|
Israel |
| X |
Italy |
| X |
Japan |
| X |
Korea |
| X |
Latvia |
| X |
Lithuania | X |
|
Luxembourg |
| X |
Mexico (local market debt) |
| X |
Mexico (external market debt) |
| X |
Netherlands | X |
|
New Zealand | X |
|
Norway |
| X |
Poland |
| X |
Portugal |
| X |
Slovak Republic |
| X |
Slovenia | X |
|
Spain |
| X |
Sweden |
| X |
Switzerland |
| X |
Turkey | X |
|
United Kingdom |
| X |
Total |
Table A.26. Q14 Potential implications of the pandemic for future debt management | |||||||||
---|---|---|---|---|---|---|---|---|---|
Boosting or establishing a cash buffer | Review of primary dealership systems | Issuance of new securities | Review of communication with Central Banks as major investors | Adaption of a business continuity/recovery plan | More emphasis on investor relations | Lengthening average maturity | Reassessment of issuance techniques | Others | |
Australia | X |
|
|
|
| X |
| X |
|
Austria |
|
|
|
| X |
|
| X |
|
Belgium | X |
|
|
|
|
| X |
|
|
Canada | X |
|
|
|
|
| X |
| 3 |
Chile | X | X |
|
|
| X | X |
|
|
Colombia | X |
| X |
| X |
| X |
|
|
Costa Rica | X |
| X |
|
| X |
|
|
|
Czech Republic | X |
| X |
|
| X | X |
|
|
Denmark |
|
|
|
|
| X |
|
|
|
Estonia |
| X | X |
|
| X | X |
|
|
Finland |
|
|
| X | X |
|
|
|
|
France |
|
|
| X | X |
|
|
|
|
Germany |
|
|
|
|
|
|
|
|
|
Greece | X | X | X | X | X | X | X |
|
|
Hungary | X |
|
|
| X | X | X |
|
|
Iceland |
|
| X |
| X |
| X |
|
|
Ireland |
|
|
| X | X |
|
|
|
|
Israel |
|
|
|
| X | X |
| X |
|
Italy |
|
| X |
|
| X |
|
|
|
Japan |
|
|
|
| X |
| X |
|
|
Korea |
| X | X |
|
|
|
|
|
|
Latvia |
| X | X |
|
|
|
|
|
|
Lithuania |
| X |
|
| X |
| X | X |
|
Luxembourg | X |
|
|
| X |
|
|
|
|
Mexico (local market debt) | X | X |
| X |
| X |
| X | X |
Mexico (external market debt) | X | X |
| X |
| X |
| X | X |
Netherlands |
|
| X |
| X |
|
|
|
|
New Zealand | X |
| X | X | X |
| X |
|
|
Norway |
|
|
|
|
|
|
|
|
|
Poland | X | X | X |
| X | X |
|
|
|
Portugal |
|
|
|
| X |
| X | X |
|
Slovak Republic | X |
| X | X |
| X |
|
|
|
Slovenia | X |
|
|
| X | X |
|
|
|
Spain |
|
|
|
| X | X |
|
|
|
Sweden |
|
| X | X |
| X |
| X |
|
Switzerland |
|
|
|
|
| X |
|
|
|
Turkey |
|
|
|
|
| X |
|
|
|
United Kingdom |
|
|
|
|
|
|
|
| X |
Total | 16 | 9 | 14 | 9 | 18 | 19 | 13 | 8 | 6 |
Table A.27. Q14 Specified OTHER implications of the pandemic for future debt management | |
---|---|
Australia |
|
Austria |
|
Belgium |
|
Canada | (i) Manage maturity structure of debt issuance and growing share of money market instruments (treasury bills). (ii) Assess whether the debt issuance mix used to raise funding during the pandemic should be modified or rebalanced.(iii) With the last two Debt Management Strategy plans, the government intends to issue a historic level of long-term bonds to manage the significant increase in debt resulting from the response to COVID-19. In light of the unique situation posed by the COVID-19 crisis, the government will continue to review the Debt Management Strategy for opportunities to borrow at longer maturities and lock in historically low interest rates, as well as enhance the predictability of debt servicing costs. |
Chile |
|
Colombia |
|
Costa Rica |
|
Czech Republic |
|
Denmark |
|
Estonia |
|
Finland |
|
France |
|
Germany |
|
Greece |
|
Hungary |
|
Iceland |
|
Ireland |
|
Israel |
|
Italy |
|
Japan |
|
Korea |
|
Latvia |
|
Lithuania |
|
Luxembourg |
|
Mexico (local market debt) | more flexible mechanisms in order to issue more if the market demand conditions allow it |
Mexico (external market debt) | more flexible mechanisms in order to issue more if the market demand conditions allow it |
Netherlands |
|
New Zealand |
|
Norway |
|
Poland |
|
Portugal |
|
Slovak Republic |
|
Slovenia |
|
Spain |
|
Sweden |
|
Switzerland |
|
Turkey |
|
United Kingdom | N/A |
Table A.28. Q14 Potential implications of the pandemic for future debt management – Country Notes | |
---|---|
Australia | *Operational lessons learned from the pandemic will be incorporated into BC planning *The wisdom of having extended the yield curve and lengthened the average term of the portfolio in the years prior to the pandemic has been demonstrated over the past 18 months (i.e. lower debt refinancing task, more diversity in investor base and more points on the yield curve to fund) *Maintaining investor relation activities remains integral to AOFM operations |
Austria |
|
Belgium | As answered in question 11, there is no formal liquidity buffer but we tend to finance our needs earlier in the year in order to be able to cope with a deteriorating situation/unexpected needs. The strategy of debt lengthening was underway before the pandemic but could potentially be slightly accentuated. |
Canada | As Canada moves towards economic recovery, the shift towards long-term debt issuance, which began in 2020-21, will continue. Funding more COVID-19-related debt through long-term issuance will help provide security and stability to the government balance sheet by lowering debt rollover while remaining fiscally prudent. |
Chile |
|
Colombia |
|
Costa Rica |
|
Czech Republic |
|
Denmark |
|
Estonia |
|
Finland |
|
France |
|
Germany |
|
Greece |
|
Hungary |
|
Iceland |
|
Ireland |
|
Israel |
|
Italy | The Italian Treasury funding strategy has always been based on the principles of transparency and predictability. In order to handle possible risks deriving from a national and international geopolitical scenario, the funding strategy has always oriented toward managing interest-rate and refinancing risks, so as to continue to keep exposure to such risks under control. However, the outbreak of Covid-19 crisis has shown how the above-mentioned factors are characterized by a high level of uncertainty which makes difficult to predict their evolution over time. Therefore, more emphasis will be placed on the maintenance of a high degree of flexibility (in the choice of issuance methodologies and instruments) in order to quickly response and adapt the funding plan to the evolution of the market context. |
Japan | Comments on “Adaption of a business continuity/recovery plan”; We reaffirm the importance of developing the business environment where operations can be conducted remotely, based on the experience of the pandemic. Comments on “Lengthening average maturity”; Since the JGB market issuance amount, especially in the short–term zone, has rapidly increased in response to the COVID-19 pandemic, the flow-basis average maturity has shortened from 9 years to 6 years 10 months. We think that average maturity adjustment will be essential in the future. |
Korea |
|
Latvia | The new Primary Dealer joining the system in 2021 positively impacted auction results with additional demand. Review/enlargement of Primary Dealer system might be a topic in further years. The recently established Latvia`s Sustainability Bond framework enables us to issue Green, Social and/or Sustainability Bonds in future. |
Lithuania | Some of the implications were not a direct consequence of a pandemic, e.g. we reassessed our issuance techniques because of increased Government debt and the need to manage it more effectively, which in turn was caused by the pandemic (to an extent). |
Luxembourg |
|
Mexico (local market debt) | The response to this question is not split into local and external debt. |
Mexico (external market debt) | The response to this question is not split into local and external debt. |
Netherlands |
|
New Zealand |
|
Norway |
|
Poland |
|
Portugal | Portugal has been running cash reserves in excess of 40% of its gross funding needs for some years and during the pandemic crisis this instrument allowed the DMO to better time the market and to delay new funding until better knowledge of the true size of the additional funding needs. |
Slovak Republic |
|
Slovenia |
|
Spain | The Spanish Treasury’s overall DMO strategy was effective in the face of the pandemic. However, the sharp and sudden increase in net funding needs was, of course, a challenge. In 2020 the Spanish Treasury had to revise its net funding needs upwards from €32.5 bn to €130 bn, and later down to €110 bn. This experience was shared by many DMOs across the globe, given that no one expected the pandemic back in 2019, when the 2020 Funding Strategies were devised. Despite this drastic increase, we were able to handle the increase in funding needs quite smoothly thanks to: (1)the diversity of instruments available, (2)the deep investor pool that the Spanish Treasury enjoys, (3)the coordination with other Euro-area DMOs, and (4) stable issuance strategy followed by the Spanish Treasury, as wellas many other aspects, we were able to handle the increase in funding needs quite smoothly. However, it’s always possible to keep reinforcing our strategy and policies. To highlight two factors: Investor relations are key, to better understand what investors look for and keep these needs in mind with our issuance. Keeping a flexible strategy and having contingency plans is key for a DMO, given the importance of our role. In this respect, having faced extreme weather events and the pandemic itself, the Spanish Treasury understands that this type of planning is crucial. |
Sweden |
|
Switzerland | The issuance procedures and techniques in place have proven to be adequate and flexible enough and the existing liquidity buffer was sufficient (if not too high). Therefore, there is no need to add new instruments or fundamentally change the issuance process or the liquidity management. One point that we may review is the regularity of communication with market participants in times of high uncertainty and the resulting trade-off between flexibility and planning certainty. |
Turkey |
|
United Kingdom | The UK DMO regularly reviews its funding strategy, issuance techniques, and the primary dealer system to ensure that its practices are in line with the government’s debt management objective to minimise, over the long-term, the costs of meeting the government’s financing needs while taking into account risk. While COVID-19 has certainly required us to adapt our existing issuance practices, it has not fundamentally changed the primary market issuance model and we do not anticipate any change to the long-term strategic approach. |
Table A.29. Q15 To what extent are you concerned about the adequacy of investor demand? | |||||
---|---|---|---|---|---|
Very Concerned | Not concerned | ||||
Australia | X | ||||
Austria | X | ||||
Belgium | X | ||||
Canada | X | ||||
Chile | X | ||||
Colombia | X | ||||
Costa Rica | X | ||||
Czech Republic | X | ||||
Denmark | X | ||||
Estonia | X | ||||
Finland | X | ||||
France | X | ||||
Germany | X | ||||
Greece | X | ||||
Hungary | X | ||||
Iceland | X | ||||
Ireland | X | ||||
Israel | X | ||||
Italy | X | ||||
Japan | X | ||||
Korea | X | ||||
Latvia | X | ||||
Lithuania | X | ||||
Luxembourg | X | ||||
Mexico (local market debt) | X | ||||
Mexico (external market debt) | X | ||||
Netherlands | X | ||||
New Zealand | X | ||||
Norway | X | ||||
Poland | X | ||||
Portugal | X | ||||
Slovak Republic | X | ||||
Slovenia | X | ||||
Spain | X | ||||
Sweden | X | ||||
Switzerland | X | ||||
Turkey | X | ||||
United Kingdom | X | ||||
Total | 3 | 5 | 5 | 11 | 14 |
Table A.30. Q15 Please indicate situations or factors that give rise to concerns about future investor demand (e.g. changes in global liquidity conditions, regulations)? | |
---|---|
Australia |
|
Austria |
|
Belgium | Lower debt purchases by central banks will impact the funding cost for borrowers going forward. However, we believe underlying demand for fixed income instruments will remain strong. |
Canada | As part of business continuity planning, many risk scenarios are reviewed, and these scenarios can evolve and change over time. As part of a recent playbook manual that was prepared for a table-top exercise for debt management preparedness, one of the broad stress scenarios where the Government’s access to funding could be jeopardized was confidence crises: a persistent structural funding pressure due to insufficient demand for Government of Canada securities as a result of deterioration in market confidence and/or as a result of a potential credit downgrade. Various contingency plans have been developed to respond to different scenarios involving investor demand. |
Chile | The main risk is a significant change in the pension fund system, which affect the demand from pension managers. |
Colombia | Changes in global liquidity conditions. |
Costa Rica |
|
Czech Republic | Investor demand for CZK- or EUR-denominated government bonds maintains relatively high levels. Share of domestic investors is increasing (mainly domestic banks), while share of non-resident holders decreased from 40% in 2019 to 30 % at the end of September. |
Denmark |
|
Estonia | Estonia has minor funding needs. |
Finland | A poorly communicated or executed exit from QE by the Central Banks |
France | Regulation changes for long-term investors (e.g. pension funds, insurers), change in central banks monetary policies |
Germany |
|
Greece |
|
Hungary | Monetary policy changes (QE tapering); households’ demand; inflation |
Iceland |
|
Ireland | Change in investor dynamics as the ECB QE buying reduces |
Israel |
|
Italy | The slowing path of ECB Purchase Programme would probably affect the investor’s demand in the near future in a relevant way. |
Japan |
|
Korea |
|
Latvia | Climate related matters and respective demand driven by ESG investors. Global growth and inflation expectations and investors demand for duration. |
Lithuania | The issues we face are not related to the lack of investor demand but rather to the current market conditions were there is no significant difference in cost of borrowing for issuers of different rating categories |
Luxembourg |
|
Mexico (local market debt) | Local Market Debt The foreign capital outflows. Retirement fund managers have reduced their appetite for investment in local currency against a potential dollar strengthening. Increasing government financial needs. Increasing maturities for the debt portfolio. Monetary policy normalization. China has been incorporated into Global Debt Indexes; consequently, they have captured an important amount of capital flows addressed to emerging markets. |
Mexico (external market debt) |
|
Netherlands | Increased competition in European bond markets (more issuance by all European Debt Management Offices (DMO’s) in response to corona, but also an increased presence of the European Commission), regulation impacting investor demand. |
New Zealand |
|
Norway |
|
Poland | Changes in monetary policy of national and key foreign central banks. |
Portugal | The end of PEPP program by the ECB could lead to a decrease of investor demand in general for the EGB market. In addition, the rise in inflation could significantly increase the rates and affect the investor demand for PGB market. |
Slovak Republic | Concerned of ECB tapering and replacement of ECB position by new investors outside of domestic market. |
Slovenia |
|
Spain | Given how varied our investor base is, thanks to the efforts carried out in past years directly by the Spanish Treasury and through our Primary Dealer Network, we do not see a specific risk in this regard. We expect investor demand to remain strong throughout possible regulation or liquidity changes. However, of course, if there were a market-shaping event, such as the Global Financial Crisis, investor behavior could be seriously affected. This means that maintaining open communications with our investor base is crucial, and something we put special emphasis in. |
Sweden | Sweden is a AAA country with a sound fiscal policy and a debt to GDP ratio of around 30% (central government). On a relative basis, we have not experienced any lack of demand or difficulties carrying out the increased funding requirement during the pandemic. |
Switzerland | As our government bonds are the most liquid and highest rated securities on the Swiss capital markets, we do not expect investor demand to be a significant problem. Even in the times of highest uncertainty, we were able to conduct successful auctions. As more than three quarter of our bonds are held by domestic investors, we have found that the demand for our bonds has been stable even in times of geo-political turbulences. |
Turkey | We are closely monitoring monetary policies and tapering plans of central banks and its impacts over the domestic market as well as any ongoing risks related to the pandemic. |
United Kingdom |
|
Table A.31. Q16 Following the pandemic which operations do you now plan to carry out remotely (including at least partially) as standard that you did NOT do remotely prior to the pandemic? | ||||||
---|---|---|---|---|---|---|
Payments/transactions | Cash management | Auctions | Derivative operations | Syndications, private placements or some other type of funding operations | Others | |
Australia | X | X | X |
| X |
|
Austria | X | X | X | X | X |
|
Belgium | X | X | X | X |
|
|
Canada |
|
|
|
|
|
|
Chile | X | X | X | X | X |
|
Colombia |
|
|
|
|
|
|
Costa Rica | X | X | X |
|
|
|
Czech Republic |
|
|
|
|
|
|
Denmark |
|
|
|
|
|
|
Estonia | X | X | X |
| X |
|
Finland |
|
|
|
|
|
|
France | X |
|
|
|
| Administrative tasks, research |
Germany |
|
|
|
|
|
|
Greece |
| X | X |
| X |
|
Hungary |
|
|
|
|
|
|
Iceland |
|
|
|
|
|
|
Ireland |
| X |
|
| X |
|
Israel | X | X |
| X |
|
|
Italy | X | X |
| X | X |
|
Japan |
|
|
|
|
|
|
Korea |
|
|
|
|
|
|
Latvia |
|
|
|
|
|
|
Lithuania | X | X | X | X | X |
|
Luxembourg | X | X |
|
|
|
|
Mexico (local market debt) |
|
|
| X |
|
|
Mexico (external market debt) |
|
|
| X |
|
|
Netherlands |
|
|
|
|
|
|
New Zealand |
|
|
|
|
|
|
Norway |
|
| X |
|
|
|
Poland |
| X | X |
| X |
|
Portugal | X |
|
| X |
|
|
Slovak Republic |
|
|
|
|
|
|
Slovenia | X | X | X | X | X |
|
Spain |
|
|
|
|
|
|
Sweden |
|
|
|
|
|
|
Switzerland |
|
|
|
|
|
|
Turkey |
|
|
|
|
|
|
United Kingdom |
|
|
|
|
| N/A |
Total | 13 | 14 | 11 | 10 | 10 | 2 |
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