25/02/2021 - Sovereign borrowing needs increased massively in 2020 following the outbreak of the COVID-19 crisis as government spending surged and revenue collection diminished. With record-low interest rates reducing the cost of borrowing and robust demand for government securities, sovereign issuers in the OECD area had to adapt their issuance strategies to the changing environment and significantly increase debt issuance without undermining the functioning of sovereign bond markets.

This report assesses the impact of the COVID-19 crisis on sovereign borrowing needs and debt issuance for 2020 and 2021. It looks at how sovereign debt management offices have been dealing with the large and unexpected increase in the borrowing needs of governments, including adjustments made to borrowing strategies and techniques. In view of continued global uncertainties and higher government refinancing needs, the chapter also provides recommendations to assist policy makers in their efforts to navigate through the crisis.

This report forms Chapter 1 of the forthcoming edition of the OECD Sovereign Borrowing Outlook which is scheduled for release on 22 April 2021. The 2021 edition examines sovereign refinancing risk management and the impact of the pandemic on sovereign borrowing in emerging markets.