Retail investors are back in vogue in sovereign debt markets. After years of negligible returns, retail investors have been increasingly attracted by higher yields post 2022 and are playing a greater role in funding governments. Indeed, median borrowing costs on fixed-rate bonds in advanced economies rose from less than 1% in 2020-21 to around 4% in 2023-24. Many issuers are welcoming this renewed interest as they need to sell record amounts of sovereign debt. Gross borrowing in OECD and emerging market and developing economies (EMDEs) was three times higher in 2024 than in 2007.
At the same time, central banks have been withdrawing from these markets after large-scale bond purchases in response to the global financial crisis, euro crisis and COVID-19 pandemic. According to the OECD’s Global Debt Report 2025, central banks’ holdings of domestic government bonds in OECD countries fell from 29% to 19% of the total between 2021 and 2024. Retail investors have been stepping in to pick up some of the slack, with their holdings increasing from 5% to 11% over the same period.
To facilitate retail access to sovereign debt, many sovereign issuers have adopted specific retail programmes. These programmes often feature dedicated products, digital platforms and specific communication campaigns. They are adopted because retail investors may be less aware of the opportunity to invest in sovereign debt and less willing or able to buy government bonds on the secondary market. Direct participation is also perceived as a more effective way to reach households in certain markets where there are limited options for retail investors to access collective investment schemes and other similar vehicles. In 2024, 22 out of 40 countries surveyed had a retail programme, the most since before the turn of the century.
The greater adoption of retail programmes has coincided with an increase in the share of government debt held by retail investors. Holdings more than doubled in the euro area from 2021 to 2024, while they increased by 50% in the United States over the same period. In Spain, retail investors held almost half of all outstanding T-bills as of July 2024. In Hungary, around a quarter of sovereign bonds are held by retail investors, while in Italy this figure is more than 10%. Japan is an important exception though, with retail investors remaining marginal, due to the continuation of low rates.
Amongst EMDEs, retail holdings of government bonds in Brazil through the Tesouro Direto programme increased by 150% between 2020 and 2024, reaching 2.1% of GDP. In Indonesia, the number of retail investors almost doubled over the same period, and they bought 19% of the domestic bonds and sukuks issued in 2024.
Retail programmes can help to address policy objectives beyond increasing funding from retail investors. They can increase investor base diversification, and put downward pressure on funding costs. Programmes can also encourage greater retail participation in capital markets by channelling idle savings into investments. They may also stimulate greater competition in the savings market by putting pressure on the private sector to offer improved returns to compete for retail savings. Lastly, they can contribute to strengthening financial literacy and promoting financial inclusion, especially in less developed markets.
A recent review of practices in the OECD area shows that several factors can support the success of a retail programme. The objective(s) of the programme should be clear from the outset, as this will influence the cost-benefit assessment. Products offered to retail investors should be easy to understand and to buy. Issuers are also increasingly making use of fintech to improve access, including through the adoption of their own online platforms. In addition, it is important to help raise awareness through targeted marketing campaigns.
One key dimension is the degree of development and attractiveness (notably regarding management fees) of other financial products that offer retail investors exposure to government debt, for example, collective investment schemes, such as mutual funds. These vehicles often represent an efficient alternative for retail investors to invest in government securities and capital market instruments, offering immediate liquidity in case investors want to sell their holdings. The absence of such products may increase the need for a specific programme to directly target retail investors.
However it is important to acknowledge the limitations and potential drawbacks of retail participation in sovereign debt markets. As an investor group they may fail to raise significant levels of funding, particularly in countries where there are suitable and competitive alternative products available to them. There are also operational costs involved in running specific programmes, although these can be lowered by the use of fintech. Retail investors are also particularly price-sensitive, and this can increase refinancing risk if yields fall significantly. Meanwhile, in countries with high borrowing requirements, retail investors will likely only ever constitute a small share of the investor base. So, pursuing a diversified investor base, which takes into consideration country-specific contexts, remains the most prudent approach for sovereign issuers.
These lessons are also relevant for EMDEs, several of which have been at the forefront in leveraging new technologies to reach out to retail investors. For example, Kenya has implemented a government bonds subscription platform though mobile phones, while Thailand launched a blockchain-based government savings bond in 2020. Meanwhile, the Reserve Bank of India launched in 2021 Retail-Direct, giving online access to the primary and secondary market for government securities, with c. 250,000 accounts opened so far.
The resurgence of retail investors in sovereign bond markets has been driven by more attractive yields, greater market accessibility, and a desire for greater investor base diversity amid global uncertainty. As governments and institutions adapt to this changing dynamic, the role of retail investors is poised to become increasingly influential.
Looking ahead, technological advances — from digital trading platforms to AI-driven investment tools — are set to further empower retail investors, potentially deepening their participation and reshaping how sovereign debt markets operate.[1]
For further information on the OECD’s work on public debt management, please consult Public debt management | OECD
For further information on the World Bank’s work on capital markets and government bonds please consult Capital Markets
[1] For a more comprehensive review of sovereign retail debt programmes and instruments adopted by OECD and partner countries, please see the OECD’s recent working paper. The key findings of this paper were presented at the 2024 International retail debt management symposium co-hosted by The World Bank and the US Department of the Treasury.
