Buyback and Exchange Operations: Policies, Procedures and Practices among OECD Public Debt Managers

Hans Blommestein (), Mehmet Emre Elmadag and Jacob Wellendorph Ejsing
Additional contact information
Mehmet Emre Elmadag: OECD

No 5, OECD Working Papers on Sovereign Borrowing and Public Debt Management from OECD Publishing

Abstract: This paper reports on a survey carried out among OECD government debt managers on the use of bond buybacks and exchange operations. The survey shows that government debt managers use extensively bond buybacks and exchanges (often referred to as "switches") as liability management tools.Bond exchanges and buyback operations serve two main purposes. First, by reducing the outstanding amounts of bonds close to maturity, exchanges and buybacks help in reducing roll-over peaks and thus lowering refinancing risk. Second, exchanges and buybacks allow debt managers to increase the issuance of on-the-run securities above and beyond what would otherwise have been possible. The resulting more rapid build-up of new bonds enhances market liquidity of these securities. This in turn should eventually be reflected in higher bond prices. Hence, bond exchanges and buybacks are aimed at lowering refinancing risk. In addition these operations may also contribute to lower funding costs for governments.

Keywords: debt buybacks; exchange operations; liability management; sovereign debt management; switches (search for similar items in EconPapers)
JEL-codes: G28 H63 (search for similar items in EconPapers)
Date: 2012-09-13
References: Add references at CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
https://doi.org/10.1787/5k92v18rh80v-en (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oec:dafaaf:5-en

Access Statistics for this paper

More papers in OECD Working Papers on Sovereign Borrowing and Public Debt Management from OECD Publishing Contact information at EDIRC.
Bibliographic data for series maintained by ().