Most Sovereign Debt Issuers Can Still Borrow – at a Premium
Oxford Analytica says extraordinary borrowing levels in many countries to finance stimulus and financial system support packages are testing investors’ appetites for sovereign debt.
“New debt security issuance by sovereign borrowers in the coming year (2009) is likely to be approximately 3 trillion dollars, three times more than in the previous year. The magnitude of the planned new borrowing raises questions about the capacity of global savings to absorb the new debt.”
Despite pockets of weakness, current demand conditions suggest that most sovereign debt issuers will be able to achieve their short-term borrowing targets.
“The appetite for US Treasuries is strong, although a preference for shorter-term issuance remains. For the time being, moderately higher-risk issuers continue to be able to float new bonds, albeit at premium yields.”
For details see Debt Issuance Will Come at a Premium.
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