Global Debt Report 2025

1. Sovereign borrowing outlook

Abstract

Sovereign bond issuance in OECD countries continued to rise in 2024, albeit at a slower pace compared to 2023. Increased borrowing needs and high borrowing costs have driven interest payments to a higher share of GDP in 2024. These two factors, combined with slowing nominal GDP growth, contributed to the first increase in the central government marketable debt-to-GDP ratio since 2020.

Meanwhile, the supply of bonds needing to be absorbed by the market accelerated as central banks continued to scale back their holdings, leading to increased reliance on a more price-sensitive investor base. Overall, market liquidity has improved, but volatility remains elevated amid heightened geopolitical risks and macro-financial uncertainty.

Introduction

This chapter explores developments in sovereign debt in OECD countries between 2007 and 2025. It analyses borrowing needs, outstanding debt trends, issuance strategies, borrowing costs, interest payments and their impact on debt dynamics, changes in investor bases amid quantitative tightening (QT), and liquidity in sovereign bond markets. This chapter draws mainly on responses from OECD Debt Management Offices (DMOs) to surveys on the marketable debt of central governments, primary market developments and liquidity in secondary government bond markets. It provides data up to 2023, with 2024 estimates and 2025 projections as of December 2024. The methodology can be found in Annex 1.A.

Key findings

• Sovereign debt issuance in OECD countries reached nearly USD 16 trillion in 2024, up from USD 14 trillion in 2023, and is projected to rise to USD 17 trillion in 2025. With increased treasury bill issuance in recent years, refinancing needs are expected to hit USD 13 trillion in 2025, nearly 80% of gross borrowing. Meanwhile, net borrowing in 2025 is projected to remain around 2024 levels, at around USD 3 trillion, double the pre-pandemic average.

• Outstanding sovereign bond debt in OECD countries is projected to reach nearly USD 59 trillion in 2025, up from USD 55 trillion in 2024 and USD 54 trillion in 2023. The aggregate debt-to-GDP ratio rose for the first time since 2020, to 84% in 2024, up from 82% in 2023. It is projected to grow further to 85% in 2025 as higher fiscal deficits and rising effective interest rates offset growth and inflation effects.

• Borrowing through treasury bills will comprise half of market borrowing in 2024-25, exceeding the ten-year average by 10 percentage points. Meanwhile, the share of inflation-linked bonds issued in 2024 remained below pre-pandemic levels for 13 of 18 regular issuers.

• Borrowing costs on fixed-rate bonds remained at nearly 4% in 2024, compared to 2% in 2022 and less than 1% in 2021 and 2020. Yields across OECD countries’ sovereign curves moved unevenly, with short-term rates declining more than long-term rates, with the widening term spreads raising the cost of managing refinancing risks for sovereign issuers.

• The interest payments-to-GDP ratio in OECD countries rose from an average of 3.0% in 2023 to 3.3% in 2024. As of 2024, one-third of fixed-rate debt in OECD countries will mature by 2027, 60% of which was issued before 2022. Refinancing this debt could raise interest payment-to-GDP ratios further, by an average of 0.2 percentage points.

• Central banks’ holdings of domestic sovereign bonds declined from a peak of USD 15 trillion in 2021 to USD 12 trillion in 2024, and are projected to drop by USD 1 trillion in 2025. This resulted in a higher supply of bonds needing to be absorbed by markets, stretching investor appetite for long-dated bonds in some countries.

• Foreign investors and households have taken on a larger share of government debt as central bank holdings decrease. In 25 countries, which accounted for 90% of OECD debt in 2024, central bank holdings of domestic sovereign bonds fell from 29% in 2021 to 19% in 2024, while households and foreign investors’ shares grew from 5% to 11% and 29% to 34%, respectively.

• While liquidity in sovereign bond markets has improved, volatility remains above pre‑pandemic levels. Primary dealers have supported market liquidity, but limited warehousing capacity may pose challenges, particularly during periods of heightened market stress.

Borrowing requirements and outstanding debt trends

Gross borrowing and outstanding debt are expected to rise further in 2025

Gross borrowing requirements (i.e. borrowings from the bond markets) in the OECD area are projected to rise further in 2025 but at a slower pace than in the previous two years (Figure 1.1, Panel A). After peaking during the pandemic, borrowing declined to USD 12 trillion in 2022, before rising to over USD 14 trillion in 2023, and reached nearly USD 16 trillion in 2024. It is projected to reach USD 17 trillion in 2025. In real terms, growth in gross borrowing is projected to slow from 13% in 2023 to 7% in 2024 and 6% in 2025,1 reflecting a stabilisation in borrowing relative to OECD GDP at 24% in 2024-25, up from 20% in 2022 and 22% in 2023. This level remains seven percentage points of GDP above the pre-pandemic average due to higher net borrowing and refinancing requirements.2

Higher refinancing requirements are driving the expected increase in gross borrowing for 2024-25 (Figure 1.1, Panel B). They are projected to gradually move from USD 11 trillion in 2023 to around USD 13 trillion in 2025. This increase is due to higher treasury bill (T-bill) issuance in 2023-24, including the refinancing of greater T-bill issuance, done in response to the pandemic, with outstanding T-bill stocks still exceeding their pre-pandemic levels.

On the other hand, net borrowing is estimated to have declined from nearly USD 4 trillion in 2023 to USD 3 trillion in 2024, and is projected to remain around this level in 2025. This is still significantly higher than pre-pandemic levels. In real terms, the 2025 net borrowing level will be close to double the pre-pandemic average of less than USD 2 trillion.3 This elevated borrowing reflects slower output growth compared to the pre-pandemic period, reducing tax revenues, alongside increased spending pressures from interest payments, defence, population ageing and the energy transition (OECD, 2024[1]).

Figure 1.1. Gross borrowing, net borrowing, refinancing requirements and outstanding debt levels

Gross borrowing and debt levels are set to increase in 2024-25, with net borrowing still exceeding pre-pandemic levels and refinancing requirements hitting a record high

Note: 2024 values are estimations, and “2025p” denotes projections.

Source: 2024 OECD Survey on Central Government Marketable Debt and Borrowing; OECD (2024[1]), OECD Economic Outlook, Volume 2024 Issue 2, No. 116, https://doi.org/10.1787/d8814e8b-en; LSEG; national authorities’ websites; and OECD calculations.

Net borrowing has largely mirrored fiscal deficits since 2022, suggesting that bond issuances are having a marginal impact on cash balances (Figure 1.1, Panel C).4 This contrasts with 2020, when net borrowing significantly exceeded fiscal needs as governments increased liquidity buffers, unsure of the precise fiscal impacts of lockdown measures, and with 2021, when excess liquidity from 2020 was drawn down, reducing net borrowing during the year. While these cash balance movements in 2020 and 2021 represented the general trend in most OECD countries, variations in cash balance movements across countries can be substantial, driven by differing liquidity risk management policies and objectives (Box 1.1).

The growth of outstanding central government marketable debt (stock of outstanding bonds) slowed in 2024 compared to 2023, but is projected to speed up again in 2025. (Figure 1.1, Panel D). The debt stock increased by USD 4 trillion in 2023 (compared to 2022), reaching USD 54 trillion, and rose to USD 55 trillion in 2024. It is projected to rise further to USD 59 trillion in 2025. The slower growth in 2024 reflects both declining net borrowing needs and the appreciation of the US dollar against other OECD currencies in 2024, reducing the outstanding debt in USD terms for other OECD countries.

The debt-to-GDP ratio in OECD countries reached 84% in 2024, rising by more than one percentage point from 2023. It is projected to rise further to 85% in 2025. The increase in 2024 was the first since 2020, reflecting slower projected GDP growth of around 2% annually during this period, compared to over 4% in 2022-23, when the economy was recovering from the pandemic. A more detailed analysis of debt-to-GDP dynamics is provided in the section on “Interest payments and their impact on debt-to-GDP ratio dynamics”.

Net borrowing as a share of GDP remains above pre-pandemic levels in most countries

Analysing OECD aggregate movements obscures significant variation among countries, as a few large issuers dominate these trends. Specifically, the top five issuers — the United States, Japan, France, Italy and the United Kingdom — accounted for over 85% of gross borrowing in OECD countries in 2024, with the United States alone representing over two-thirds of the total.5

In terms of net borrowing-to-GDP ratios, the OECD aggregate declined in 2024 compared to 2023, despite increasing in more than half of OECD countries during this period (Figure 1.2, Panel A). Among them, the largest increases are seen in Portugal (due to rising indexed pension expenditure and tax cuts), Israel (amid the conflict in the Middle East), and Colombia (owing to utilities and diesel subsidies, and tax exemptions) (OECD, 2024[1]). Net borrowing-to-GDP ratios declined in 16 countries, including large issuers such as Germany, Italy, Japan and the United States (Figure 1.2, Panel C), driving the OECD aggregate movement.

Importantly, in most OECD countries, the net borrowing-to-GDP ratio remains higher compared to pre‑pandemic levels. Notably, only 6 out of 38 OECD countries – Australia, Chile, Costa Rica, Ireland, the Netherlands and Portugal – had lower levels in 2024 compared to their 2015‑19 average (Figure 1.2, Panel D). Both the average and median net borrowing-to-GDP ratios in the OECD rose by approximately two percentage points from 2015-19 to 2024, reflecting the continuation of higher fiscal needs across members in the period following the pandemic.

Unlike net borrowing requirements, the OECD aggregate refinancing requirements as a share of GDP are increased in 2024, but to have declined in most member countries (Figure 1.2, Panels B and E). Refinancing requirements tend to be more stable than net borrowing, as they are shaped by the debt maturity portfolio, which is a result of decades of issuances. As such, significant movements in a few large issuers disproportionately impact the aggregate. For example, the United Kingdom and the United States shortened their issuance profile in 2023-24, a period of higher net borrowing for both, leading to an increase in the refinancing needs-to-GDP ratio of over two and six percentage points, respectively.

Figure 1.2. Net borrowing and refinancing requirements

As a share of GDP, net borrowing declined and refinancing requirements remained largely stable from 2023 to 2024 in most OECD countries

Note: 2024 values are estimations, and “2025p” denotes projections. The OECD aggregate in Panels A and B and the OECD in Panels C, D and E refer to the sum of all OECD countries' borrowing requirements divided by the sum of OECD countries’ GDP.

Source: 2024 OECD Survey on Central Government Marketable Debt and Borrowing; OECD (2024[1]), OECD Economic Outlook, Volume 2024 Issue 2, No. 116, https://doi.org/10.1787/d8814e8b-en; LSEG; national authorities’ websites; and OECD calculations.

While the OECD refinancing requirements as a share of GDP grew in 2024, only 15 countries saw an increase, including major issuers such as France, Italy, the United Kingdom and the United States. Declines in refinancing requirements exceeding two percentage points of GDP occurred in Luxembourg and Portugal.

Box 1.1. Government cash buffer trends and cash management practices in selected countries

Debt and cash management interact in many ways and are often managed by the same government agency to ensure close co-ordination. As most countries have marked seasonal cash flow patterns, debt management offices select debt issuance and maturity dates to match these, minimising fluctuations in cash balances. Thus, cash management considerations are important for debt management.

The main goal of cash management is to ensure that the government meets its payment obligations. One of the main tools used to meet this objective is the maintenance of a cash buffer, a targeted cash balance held with the central bank. This can serve as insurance against liquidity risks, enabling issuers to meet obligations if cashflows differ from projections or market access is disrupted.

Cash management policies and practices vary significantly depending on certain factors, such as the agreements in place between the treasury and the central bank, the risk appetite of the issuer and the depth of local money markets. For example, Canada and the United States hold surplus cash as central bank deposits, targeting 7 and 23 days of net cash flows respectively. Some countries hold cash deposits at commercial banks and invest in short-term liquid assets. For example, several euro area countries hold negligible cash deposits at their national central banks, partly due to the relatively high margin between short-term market and deposit rates in recent years. In Italy, as of 2024, the cash invested by the treasury in the market was more than double the country’s central bank cash deposits.

Figure 1.3 illustrates the changes in central bank cash deposits for selected countries. At the start of the COVID-19 pandemic, sovereign issuers overborrowed as insurance against the uncertain fiscal impacts of lockdowns, with cash balances sharply increasing from Q1 2020. In G7 countries, combined cash balances neared USD 3 trillion at the height of the COVID-19 period, up from around USD 1 trillion just a few months prior. As economies recovered and cashflows stabilised, countries generally returned to pre-pandemic practices, and combined G7 cash balances fell back to around USD 1 trillion from 2022 onwards.

Figure 1.3. Central bank cash deposits in selected countries between 2017-24

Note: The charts include quarterly data for the United States and monthly data for other countries.

Source: Bank of Canada, Bank of Japan, European Central Bank and Federal Reserve; OECD (2025[2]), Managing Government Cash: A Review of Practices in OECD Countries, OECD Publishing, Paris, https://doi.org/10.1787/7675eb58-en.

Issuance plans and strategies

Treasury bills continued to account for nearly half of OECD borrowing

Issuance strategies refer to the breakdown of gross borrowing by instrument type and maturity. The primary goal of debt managers is to minimise long-term borrowing costs while controlling risks. Short-term instruments and those with variable rates typically have lower long-term costs but heighten refinancing or interest rate risks, while long-dated fixed-rate instruments mitigate these risks at a higher cost. Additionally, not all issuance strategies are feasible as they are conditioned on market demand, with different investors typically active in a certain segment of the yield curve. Thus, to balance costs and risks and to be able to fund all the borrowing requirements, sovereign issuers often diversify their issuances across a range of maturities and instrument types.6

The fixed-rate issuance share in OECD countries is expected to remain below 50% in 2024-25, the second lowest level since 2008, with the lowest seen in 2023 (Figure 1.4, Panel A). The fixed-rate share stayed above 55% throughout 2009-19, before decreasing in 2020, during the height of the pandemic.

Despite the sharp rise in the share of T-bill issuance from the pre-pandemic average of 36% to 49% in 2024, significant increases occurred in only approximately one-quarter of OECD countries (Figure 1.4, Panel B). The share rose by more than 5 percentage points in 10 countries during this period but fell by more than or nearly 5 percentage points in 9 others. In both groups, the average change was around 15 percentage points. Therefore, the main driver of the higher overall T-bill issuance share is the size of issuers in these groups, with the two largest (Japan and the United States) issuing higher shares of T-bills in 2024 compared to 2015-19 averages, reflecting a recent change in their issuance strategies (TBAC, 2024[3]; Government of Japan, 2024[4]).

One factor prompting some sovereign issuers to increase the T-bill issuance share is the current environment of heightened fiscal, geopolitical and macro-financial uncertainties (see Box 1.2). Sovereign issuers often maintain a regular and predictable issuance framework with frequent, similarly sized auctions across the yield curve. To preserve this predictability, unexpected funding needs are often met through T-bills, avoiding abrupt changes in long-term debt issuance that could affect liquidity premiums. Therefore, T‑bills are particularly useful in providing more flexibility, which is needed in the current environment.

A second factor driving increased T-bill issuance is the capacity of the market to absorb short-duration instruments. Historically, depressed term spreads have made low-duration securities attractive, offering relatively high returns with less risk. As such, investors can use T-bills to mitigate risks in a rapidly shifting macro-financial environment without necessarily compromising on returns. Additionally, quantitative tightening and high borrowing levels significantly increase the supply of bonds and the duration risk to be absorbed by markets. In this environment, shifting issuance toward T-bills not only leverages demand for short-duration instruments but also helps limit elevated term premiums, which can potentially reduce the cost of issuing conventional bonds.

In some countries, the relative attractiveness of short-term instruments is also supported by regulatory factors. For instance, in the United States, a Money Market Fund reform has driven structural demand for T-bills (TBAC, 2024[3]).7 In Japan, life insurance companies’ demand for long-term bonds has decreased due to progress made in meeting regulatory requirements (Bank of Japan, 2024[5]).

Figure 1.4. Instrument composition of gross borrowing and average term to maturity of outstanding debt

The treasury bill share of borrowing has increased while the inflation-linked share has declined since the pandemic

Note: “2024e” denotes estimations. Panels B and D only include countries regularly issuing T-bills and inflation-linked bonds, respectively. In Panel E, “Avg.” represents the simple average, while “OECD” denotes the average weighted by the outstanding debt stock.

Source: 2024 OECD Survey on Central Government Marketable Debt and Borrowing; OECD (2024[1]), OECD Economic Outlook, Volume 2024 Issue 2, No. 116, https://doi.org/10.1787/d8814e8b-en; LSEG; national authorities’ websites; and OECD calculations.

The downsides of greater T-bill issuance include increased refinancing needs and interest rate risk. Managing larger refinancing needs may require larger liquidity buffers to guard against potential market access disruptions, which may generate costs through term premiums.8 Additionally, T-bills amplify interest payment volatility, as a larger share of debt is refinanced annually at prevailing market rates. Hence, determining the optimal level of T-bill issuance involves balancing the risks of heightened refinancing and interest rate exposure against the benefits of typically lower cost and lower duration. This balance evolves based on market conditions and expectations, supply-demand dynamics, monetary and fiscal policies, and the macro-financial outlook.

Another important trend in 2024 was the decline in the issuance share of inflation-linked bonds compared to pre-pandemic levels (Figure 1.4, Panel A). Inflation-linked and variable-rate bonds together accounted for 5% of gross borrowing in 2024, down from around 7% during 2015-19.9 The share of variable‑rate bonds remained stable at 3% over that period.

The decline in the share of inflation-linked bond issuance has been widespread among those that issue them, following the sharp increases in interest payments associated with these instruments due to the 2022-23 inflation spike. Inflation-linked bond issuance shares decreased in 13 of the 18 regular issuers in 2024 compared to 2015-19 and increased meaningfully only in Costa Rica (Figure 1.4, Panel D).

While most issuers are gradually reducing the share of inflation-linked bonds they issue, some have implemented more drastic changes. For instance, Canada and Germany respectively ended their programmes in 2022 and 2023 (Government of Canada, 2022[6]; Government of Germany, 2023[7]). To help reduce inflation exposure in the debt portfolio, the United Kingdom reduced the proportion of inflation-linked bonds it issued by about 15 percentage points between 2018-23, with the level stabilising at around 11% in 2024 (UK DMO, 2024[8]). This decision was taken in 2018 before the inflationary spike in 2022-23. Similarly, Sweden announced a gradual reduction of its inflation-linked programme in 2024 (Government of Sweden, 2024[9]), and also switched inflation-linked bond auctions from multi-price to single-price in order to reduce pricing uncertainty for bidders, and encourage greater auction participation (von Wayland and Schedvin, 2024[10]). In Türkiye, the share of inflation-linked bonds in the debt stock fell by more than half from nearly 14% in 2020 to about 6% in 2024 (Republic of Türkiye, 2024[11]; 2025[12]).

Although inflation-linked bonds carry asymmetrical risks, they offer significant benefits, with many OECD countries maintaining their programmes (OECD, 2024[13]). These benefits include: 1) lowering borrowing costs in the long run as investors pay inflation premiums; 2) diversifying the investor base by attracting investors with inflation-linked liabilities such as pension funds and insurance companies; 3) extending the maturity profile, as they enable investors to protect themselves from inflation risks in the long term, which in turn allows sovereigns to issue at longer maturities, reducing refinancing risks; 4) signalling the government’s commitment to inflation control; 5) providing a robust mechanism to assess real rate expectations through break-even inflation; 6) reducing fixed-rate bond supply, lowering their costs; and 7) offering tail risk protection to markets, aiding financial stability.

It is worth noting that the increase in T-bill issuance and the reduction in inflation-linked bond issuance occurred alongside a slight lengthening of the overall maturity profile for fixed-rate bonds. The share of fixed-rate bond issuances with tenors of 1 to 15 years in 2024 was around one percentage point lower than their average share in 2015-19. Meanwhile, the share with tenors exceeding 15 years increased by a similar margin in that period (Figure 1.4, Panel C). At the same time, the average ATM of the outstanding debt in OECD countries remained largely stable in 2024 at 8.1 years, higher than the pre-pandemic value of 7.7 years (Figure 1.4, Panel E).

Box 1.2. Recent revisions to annual issuance plans

Sound public debt management involves transparency, predictability and flexibility. While being predictable and programmatic is a key principle that most debt managers adopt in their policies and practices (see Box 1.3), they also adapt to changes in the funding environment and investor sentiment. This includes revising their annual borrowing plans, which typically involves adjustments to accommodate changes in the financing requirement, instrument mix, maturity profile or timing of issuance. Frequent revisions are generally indicative of volatility in fiscal needs or market conditions.

The number of sovereign issuers reporting in year changes to their original annual borrowing plans decreased from 20 countries in 2023 to 15 in 2024 (Figure 1.5, Panel A). Over the past four years, this figure peaked at 25 in 2022 when inflation hit multi-decade highs and Russia started its war of aggression against Ukraine. These events altered borrowing needs and financial conditions in many countries.

In 2024, the most common factor impacting borrowing by sovereign issuers was geopolitical risks, followed by global financial and macro-economic uncertainty (Figure 1.5, Panel C). More specifically, the war in Ukraine and conflicts in the Middle East disrupted global trade and energy markets, putting upward pressure on inflation and changing macro-financial conditions (OECD, 2024[1]).

The most common revisions to borrowing plans involved increasing the issuance share of T-bills and changing overall issuance volumes (Figure 1.5, Panel B). Eleven issuers increased the T-bill share of gross borrowing in 2024 compared to their original issuance plans. Ten issuers adjusted their issuance volumes, indicating uncertainty about borrowing needs as DMOs calibrate their issuance plans to meet their annual borrowing target without knowingly over- or under-borrowing. Despite adjustments to their in-year plans, only a few countries revised their long-term strategies (Figure 1.5, Panel D).

Figure 1.5. Revisions to borrowing plans

Source: OECD Survey on Primary Market Developments 2024.

Issuance of fixed-rate bonds funded a greater share of net borrowing needs in 2024, but remained stable as a share of the outstanding debt stock

Assessing how issuance strategies affect the composition of the outstanding debt stock requires analysing each instrument’s contribution to funding net borrowing requirements. Since many sovereign issuers aim to maintain specific instrument compositions within the debt stock, examining net borrowing by instrument composition offers valuable insights into issuance strategies and targeted debt stock composition.

Although the issuance of fixed-rate bonds funded a fairly low share of gross borrowing in 2024, issuance funded nearly double the share of net borrowing, rising from around 45% in 2023 to nearly 80% in 2024 (Figure 1.6, Panels A and B). This level is consistent with pre-pandemic figures. Meanwhile, T-bill issuance funded just 18% of net borrowing in 2024, compared to over 50% in 2023. This decline shows that high T-bill issuance shares are driven primarily by refinancing needs rather than funding a substantial share of net borrowing, as seen in 2020 during the pandemic and in 2023 amid major shifts in monetary policy.

This trend was widespread, with fixed-rate bond issuance funding more than 80% of net borrowing in most OECD countries in 2024 (Figure 1.6, Panel C). The average contributions of fixed-rate bond issuances to net borrowing rose from 81% in 2023 to 87% in 2024, while the median contribution decreased from 89% in 2023 to 85% in 2024. In several countries, including Germany and Japan, the high contribution of fixed-rate bonds to net borrowing coincided with negative net borrowing through T-bills, an issuance strategy that ultimately will lead to a higher fixed-rate bond share in the debt stock.

Figure 1.6. Instrument composition of net borrowing

The contribution of fixed-rate bond issuances to net borrowing significantly increased in 2024

Note: “2024e” denotes estimations.

Source: 2024 OECD Survey on Central Government Marketable Debt and Borrowing; OECD (2024[1]), OECD Economic Outlook, Volume 2024 Issue 2, No. 116, https://doi.org/10.1787/d8814e8b-en; LSEG; national authorities’ websites; and OECD calculations.

At the same time, net issuances of inflation-linked bonds contributed to only about 2% of the total net borrowing in 2024, against an average of 10% in 2011-20. While aggregate issuances of these instruments exceeded redemptions in 2024, the net contribution was minimal during a year of high net borrowing needs.

An exception to both these trends is Israel, which significantly increased its issuance of both inflation-linked and variable-rate bonds to fund net borrowing in 2024, reducing reliance on fixed-rate bonds. Fixed-rate shares dropped from two-thirds in 2023 to just over half in 2024, with inflation-linked and variable-rate bonds funding 14% and 22% of net borrowing in 2024 against 8% and 14% in 2023. These instruments are particularly useful in times of heightened uncertainty, enabling issuers to meet borrowing needs without increasing investors’ exposure to inflation or interest rate risk.

Figure 1.7. Instrument composition of outstanding debt

The fixed-rate share of outstanding debt remained largely stable in 2024, but the treasury bill share remained above pre-pandemic levels by a significant margin, increasing refinancing needs

Note: “2024e” denotes estimations. Panels C and D only include countries that regularly issue T-bills.

Source: 2024 OECD Survey on Central Government Marketable Debt and Borrowing; OECD (2024[1]), OECD Economic Outlook, Volume 2024 Issue 2, No. 116, https://doi.org/10.1787/d8814e8b-en; LSEG; national authorities’ websites; and OECD calculations.

As a result of these borrowing strategies, the fixed-rate bond share of the outstanding debt remained largely stable at 76% in 2024 with T-bills’ share remaining at nearly 15% (Figure 1.7, Panel A). If a similar strategy to 2024 is adopted moving forward, the share of T-bills will stay above the past decade’s 12% average, while the share of inflation-linked bonds will continue a gradual decline, approaching 7% in 2024, and not return to the pre-pandemic average of nearly 8%.

In 2024, T-bills accounted for the highest share of the outstanding debt stock since 2011 (with the exception of 2020). Since the pandemic-related surge in T-bill issuance in 2020, their share has never dipped much below 12%, whereas in 2015-19 it was around 10%. This trend of higher T-bill share is observed in about half of OECD countries or about two-thirds of those that regularly issue T-bills (Figure 1.7, Panel C). In six countries, namely Austria, Finland, Iceland, Sweden, Switzerland and the United States, the T-bill share of the debt stock remains more than five percentage points above 2019 levels. Despite this, fixed-rate bonds accounted for close to or over 70% of the debt stock in 35 OECD countries in 2024 (Figure 1.7, Panel B).

This persistently higher share of T-bills in the outstanding debt, compared to the pre-pandemic period, leads to elevated refinancing needs. Since T-bills are often rolled over multiple times annually, even a small increase in their outstanding amounts can significantly amplify refinancing requirements. In 2024, for regular T-bill issuers, T-bills accounted for 8% of outstanding debt on average but 60% of refinancing needs, excluding those issued and maturing within the same year (Figure 1.7, Panel D).10 This necessitates more active cash management, including potentially having to maintain larger liquidity buffers and offering more T-bill lines to better spread redemptions throughout the year.

Sovereign borrowing costs across yield curves

Monetary easing and wider term spreads kept borrowing costs largely stable in 2024

The volume-weighted average yield to maturity at issuance (YTM) for fixed-rate debt remained largely stable throughout 2024 in OECD countries, fluctuating around 4% (Figure 1.8, Panel A). While policy rates began to decline in most large OECD countries from mid-2024 (Figure 1.8, Panel C), they remained at recent peaks for about half of 2024. The notable exception was Japan, which raised its policy rate into positive territory in 2024 for the first time since 2010. Overall, aggregate borrowing costs in 2024 were similar to 2023 and exceeded 2015-19 averages in all OECD countries, except Costa Rica, by an average of 2 percentage points (Figure 1.8, Panel D).

Despite the relative stability in aggregate borrowing costs in 2024, borrowing costs have actually declined in 29 OECD countries and rose in only 8 (Figure 1.8, Panel D).11 The countries whose borrowing costs fell were mostly European but also included Canada, Costa Rica, Korea and New Zealand. Borrowing costs remained largely stable in the United States but increased in Japan and Mexico. Notably, Japan did not issue bonds with negative rates in 2024 for the first time since 2015, and issued (30-year and 40-year) bonds with yields exceeding 2% for the first time since 2013 (Figure 1.8, Panel B).

In the euro area, 12 countries saw a greater decline in YTMs than Germany in 2024, leading to a narrowing of their spreads to Bunds. Notably, spreads tightened by more than 10 basis points in eight countries: Estonia, Greece, Ireland, Italy, Lithuania, Luxembourg, Latvia and Slovenia. During the same period, France saw its spreads widen by nearly 10 basis points, amid heightened political uncertainty and a need for sizeable fiscal consolidation (OECD, 2024[1]).

Figure 1.8. Yield to maturity at issuance

The yield to maturity at issuance remained largely stable in 2024 overall, but actually declined in the majority of OECD countries

Note: Panels A and D exclude Chile and Estonia due to data availability issues and Türkiye due to scaling problems. The OECD aggregate refers to the average yields weighted by the amount of fixed-rate borrowing.

Source: 2024 OECD Survey on Central Government Marketable Debt and Borrowing; OECD (2024[1]), OECD Economic Outlook, Volume 2024 Issue 2, No. 116, https://doi.org/10.1787/d8814e8b-en; LSEG; national authorities’ websites; and OECD calculations.

Movements in yields across OECD countries’ sovereign curves were uneven, with shorter-term rates falling more than longer-term rates in 2024 (Figure 1.9, Panels A and B). The 2-year bond yield fell by over 10 basis points in 24 countries, rising only in Australia, Israel and Japan, with the average movement being a decline of approximately 50 basis points. Meanwhile, the 10-year bond yields fell by over 10 basis points in 18 countries but rose in Australia, Chile, Israel, Japan, the United Kingdom and the United States, with the average movement being a decrease of just under 20 basis points. As sovereigns typically issue right along their curves, but tend to concentrate issuance around the 10-year maturity, overall borrowing costs in 2024 declined only slightly from 2023, despite falling policy rates amid lower inflation expectations.

Consequently, term spreads — the difference between 10-year and 2-year bond yields — widened in 2024 across most OECD countries but remained near 15-year lows (Figure 1.9, Panel C).12 Term spreads rose by an average of 60 basis points, narrowing only in Israel and Japan (Figure 1.9, Panel D). Moreover, while 17 countries had inverted yield curves in 2023, only the term spread in Denmark remained negative in 2024. Despite this widespread increase in term spreads in 2024, they remained below 2015-19 levels in all countries except Japan, averaging +100 basis points in 2015-19 compared to -20 and +40 basis points in 2023 and 2024, respectively.

For sovereign issuers, term spreads are key indicators of the price-for-duration risk and influence the trade‑off between borrowing costs and refinancing risks. Steeper yield curves raise the cost of reducing refinancing risks. However, sovereign issuers rarely alter issuance strategies solely based on movements in yields. Instead they tend to maintain stable issuances to develop liquid benchmarks along the yield curve that appeal to different investors. While limiting flexibility to adjust to market changes, this approach reduces liquidity premiums, lowering long-term borrowing costs (see Box 1.3).

Figure 1.9. Distribution of bond yields and term spreads

Term spreads turned positive in 2024 as 2-year bond yields fell more than 10-year yields in most OECD countries, but these spreads remain well below pre-pandemic levels and are still near a 15-year low

Note: Some countries are excluded due to data availability. Panels A, B and C include only the countries listed in Panel D. Annual values in Panel D refer to the average of the twelve end-of-month term spreads.

Source: LSEG and OECD calculations.

The persistence of higher long-term nominal and real rates indicates expectations of increased neutral interest rates

Increases in term spreads meant steeper yield curves for most major issuers in 2024 (Figure 1.10).13 The curve in the United States was flat in 2024, whereas it was inverted in 2023. Japan’s yield curve moved higher and steepened further. In the United Kingdom, short-term yields declined while long-term rates rose, though the curve remained inverted from the one to the three-year mark. Germany’s yield curve shifted downwards and flattened, while France’s curve steepened as short-term yields fell significantly while long-term yields remained largely unchanged. Italy’s curve moved lower in a parallel shift. Despite some steepening in 2024, G7 yield curves remain flatter than in the pre-pandemic period.

Notably, long-term rates in these six countries are much higher in 2024 than before the pandemic. This upward shift reflects a significant repricing of long-term macro-financial prospects. Potential drivers include a higher inflation premium following the recent period of historically high inflation, as well as other factors such as the resilience of US economic growth despite elevated interest rates (TBAC, 2025[14]).

A key driver of rising long-term yields is the market perception of the neutral rate of interest (r*) or its nominal equivalent, the terminal rate—the level to which policy rates are expected to converge over the long term.14 Historically, neutral rates had been declining due to structural factors like ageing populations (Lunsford and West, 2019[15]), shifts in savings and investment patterns (Rachel and Summers, 2019[16]) and regulatory reforms (Ranaldo, Schaffner and Vasios, 2021[17]). However, in 2024, forward curves implied expectations of a higher neutral rate, reflecting the global economy’s resilience during the tightening cycle and growing divergence among forecasters, indicating increased uncertainty (BIS, 2024[18]). Rising neutral rate expectations could influence sovereign borrowing costs.

Figure 1.10. Yield curves in selected countries

Yield curves became less inverted in 2024 as short-term rates fell, but yields remain well above pre-pandemic levels

Note: This chart shows the average daily yields over the last quarter of the year, unlike the annual averages presented in previous figures. For 2015-19, the values represent the average of the quarterly averages over the five years from 2015 to 2019. Country panels are arranged by GDP, with the three euro area countries placed in the same row to improve comparability. Annex 1.B has similar charts for more countries.

Source: LSEG and OECD calculations.

One implication of the increase in the neutral interest rate is the higher real cost of bond debt (real yields), measured as the difference between nominal rates and breakeven inflation.15 Before the pandemic, 10-year real yields were mostly between -1% and 1%, but since 2023, they have fluctuated between 1% and 2% (Figure 1.11, Panel A). This rise reflects that nominal 10-year yields in 2024 were about two percentage points higher than pre-pandemic levels, while breakeven inflation increased by one percentage point over the same period (Figure 1.11, Panels C and D). As a result, real yields in 2024 exceeded pre-pandemic values in all OECD countries with breakeven inflation data except Japan, where they were largely unchanged, remaining in negative territory.16

Ten-year real yields in 2024 were higher than both their 2015-19 averages and 2023 levels in all OECD countries with breakeven inflation data except Italy (Figure 1.11, Panel B). The increase in real rates in 2024 happened despite declining borrowing costs in most of these countries, which were driven by lower short-term rates, while long-term rates remained high or declined less than inflation expectations. While real rates increased in Germany and France, they remained stable in Italy in 2024, with narrower spreads to Bunds amid fiscal consolidation efforts and rising primary balances (OECD, 2024[1]).

Ten-year real yields were positive in 2024 in almost all these countries except Japan. Typically, positive real yields put upward pressure on debt-to-GDP trajectories by raising interest payments (OECD, 2024[13]). Although debt-to-GDP ratio trajectories improved in 2022-23 amid rising nominal yields, this was driven by inflation eroding the real value of outstanding debt — a dynamic that has been fading as inflation converges to target. All other factors being equal, rising real rates will push up the primary balances required to stabilise debt levels in many OECD countries.

Figure 1.11. Distribution of ten-year real yields, nominal yields and breakeven inflation

Real yields remain near decade highs as ten-year rates stay elevated while break-even inflation gradually declines

Note: This figure only includes countries with sufficient break-even inflation data, as listed in Panel B. Annual values in Panel B refer to the average of the monthly average real yields.

Source: LSEG and OECD calculations.

Interest payments and their impact on debt-to-GDP ratio dynamics

Interest payment-to-GDP ratios continued to rise in 2024 and will rise further if borrowing costs remain high

In 2024, the gross interest payments-to-GDP ratio continued to rise, reaching 3.3%, up from 3.0% in 2023 and 2.7% in 2015-19, reaching the highest level since 2010 (Figure 1.12, Panel A). As a result, OECD countries are projected to allocate a larger share of government revenue to interest payments in 2024 than to several major government functions combined, including defence and housing (Figure 1.12, Panel B).17

In terms of country-specific trends, interest payments to GDP ratios are expected to have increased in 24 OECD countries in 2024 (Figure 1.12, Panel C). The largest increases, exceeding 0.3 percentage points of GDP, were observed in Belgium, Czechia, Finland, Poland and the United States. Except for Czechia, all these countries had net borrowing needs as a share of GDP above the OECD average and median.

Interest payments-to-GDP ratios declined by more than one percentage point in three countries in 2024: Iceland, Norway, and the United Kingdom.18 In Norway, low net borrowing needs in recent years have led to lower interest payments. In Iceland and the United Kingdom, where inflation-linked bonds make up a significant share of debt, declining inflation was an important factor behind lower interest payments.

Despite an increase in interest payments-to-GDP ratios in most OECD countries in 2024, these ratios were only higher compared to 2015-19 in about half of countries (Figure 1.12, Panel D).19 The median ratio was around 1.5% in 2024, similar to the pre-pandemic period from 2015-19. There were only seven countries, Australia, Czechia, Finland, Hungary, Poland, Sweden and the United States, where this ratio rose by more than 0.5 percentage points of GDP in 2024 compared to the 2015-19 average. This group comprises four countries whose primary balances declined from an average of nearly zero in 2015-19 to -2% of GDP in 2022-24, compared to a decline from -1% to -2% in the OECD overall across the same period.

Therefore, for about half of OECD countries, the recent monetary tightening cycle has only partially reversed the reductions in interest payments-to-GDP ratios achieved during the second half of the past decade. These earlier declines stemmed from a combination of economic growth, lower primary deficits and falling long-term rates, particularly in the euro area following the launch of the European Central Bank’s (ECB) quantitative easing programme in March 2015 (ECB, 2024[19]). Thus, interest payments-to-GDP ratios remain below historical highs in most OECD countries, but are projected to continue rising in the coming years.

Figure 1.12. Gross interest payments as a share of GDP

Interest payments as a share of GDP continued to rise in most OECD countries in 2024 but remained below pre-pandemic averages in about half of them

Note: This figure shows the values of general government and gross interest payments. Panels A and B include only countries with sufficient data in the OECD Economic Outlook, as shown in Panels C and D. The OECD aggregate in Panel A and the OECD value in Panels C and D represent the total general government interest payments divided by the total GDP of these countries.

Source: OECD System of National Accounts; OECD (2024[1]), OECD Economic Outlook, Volume 2024 Issue 2, No. 116, https://doi.org/10.1787/d8814e8b-en; and OECD calculations.

Movements in interest payments-to-GDP ratios are gradual because they reflect yields on the entire outstanding debt stock issued over decades. Even sharp increases in borrowing costs have a limited immediate impact, as they affect interest payments only through the refinancing or refixing of maturing debt and new issuances. However, the slow-moving nature of debt interest costs also has the opposite impact, with bonds issued at higher rates locking in elevated interest payments for their entire lifespan and, particularly for longer maturities, impacting public finances for decades to come. While the financing costs for short-term, variable-rate, and inflation-linked debt already reflect the higher rate and inflation environment, most fixed-rate debt issued before 2022 has yet to be refinanced. If, as projected, it is mostly refinanced at higher rates, this will put further pressure on public finances.

Additionally, (nominal) effective interest rates (the ratio of interest payments to the outstanding debt stock) are expected to rise even in a hypothetical scenario where countries generate sufficient primary surpluses to avoid refinancing maturing debt. This is because debt issued at low rates before and during the pandemic will mature earlier than debt issued under the current higher-rate environment (Figure 1.13, Panel A). More precisely, bonds with yields below 1% accounted for around 40% of the total outstanding fixed-rate debt in 2022-23, nearly 30% in 2024, and are projected to account for 17% by 2030.20 Conversely, bonds with yields above 4% comprised just over 5% of total fixed-rate debt in 2022-23, 13% in 2024, but are projected to account for nearly 20% in 2030.21

Without substantial primary surpluses, about one-third of the outstanding fixed-rate debt in the OECD as of 2024 is expected to mature by 2027 and will likely be refinanced at higher rates (Figure 1.13, Panel B). Sovereign issuers maintain regular issuances across the curve to ensure a smooth redemption profile, which spreads out refinancing obligations fairly evenly over the next few years. As a result, around 10% of the outstanding fixed-rate debt stock is expected to mature each year until 2030, without any significant spikes in maturities or refinancing risks in a single year.

Around 60% of the fixed-rate debt in the OECD that will mature by 2027 (approximately USD 9 trillion) was issued in 2021 or earlier, before the recent tightening cycle, most likely at yields below current market rates. Specifically, the average YTM of the maturing debt in 2025-27, weighted by outstanding amounts, remains below 2% in all three years. By comparison, the average of the projected 10-year interest rate in OECD countries is expected to remain around 3.6% in 2025 (Figure 1.13, Panel C). The debt maturing in 2025-27 will, therefore, likely be refinanced at nearly twice the original rates.22

The rise in interest payments from debt refinancing in the coming years will differ depending on the share of fixed-rate debt maturing relative to GDP and the gap between prevailing market rates and rates on maturing debt (Figure 1.13, Panel D). Four countries — France, Spain, the United Kingdom and the United States — face heightened vulnerability, with the debt maturing by 2027 exceeding 15% of their current GDP and the average yield-to-maturity on debt issued in 2024 surpassing that of this maturing debt by over 1.5 percentage points. For these countries, debt refinancing is expected to increase interest payments by roughly 0.4 percentage points of GDP by 2027. In other OECD countries, the average increase is projected to remain below 0.2 percentage points of GDP.

Figure 1.13. Yields, maturity profile and interest payments

Interest payments are set to rise further as market yields are expected to remain higher than the coupons on maturing debt

Note: This figure shows general government values and only displays countries with sufficient data in the OECD Economic Outlook. Short-term rates have varying definitions across countries but generally refer to 3-month bank rates. Panel D includes only the country labels of the countries that are “on the border” of the distribution, as including all labels would hinder the visualisation of the data points. 10-Y refers to 10-year sovereign bond yields.

Source: OECD (2024[1]), OECD Economic Outlook, Volume 2024 Issue 2, No. 116, https://doi.org/10.1787/d8814e8b-en; LSEG; and OECD calculations.

With higher interest costs, the debt-to-GDP ratio increased for the first time since 2020

Higher projected interest payments, combined with primary deficits above pre-pandemic levels, pushed up the central government marketable debt-to-GDP ratio from 82% in 2023 to 84% in 2024. It is projected to rise further to 85% in 2025 (Figure 1.1, Panel D, and Figure 1.14, Panel A). This marks a turning point in debt-to-GDP trends, which were largely stable or growing slowly in the five years before the pandemic and either stable or declining in the years immediately after, between 2021 and 2023.

These recent changes in debt-to-GDP dynamics are largely driven by movements in effective real interest rates (the combined effects of nominal rates and inflation) and primary balances. In 2015-19, real interest rates had a near-zero impact on debt ratios, while the effects of primary deficits were largely offset by growth, stabilising debt trajectories (Figure 1.14, Panels A and D). In 2021-23, higher primary deficits were outweighed by negative real rates, as inflation far exceeded borrowing costs (Figure 1.14, Panel E). In 2024-25, nominal effective rates are expected to rise as more debt is issued at higher rates, while debt issued when rates were lower matures, and inflation converges towards targets. This shift will result in a scenario with both positive real effective rates and a high primary deficit relative to pre-pandemic levels, driving the debt ratio upward.

This movement in the aggregate debt-to-GDP ratio in the OECD reflects an increase in ratios in 23 OECD countries in 2024 against a decrease in 15. Cross-country differences were primarily driven by variations in nominal effective interest rates and primary balances (Figure 1.14, Panels B and C). In countries with rising ratios, primary balances and nominal interest rates added an average 1.6 and 1.2 percentage points of GDP to these ratios respectively, compared to 0.4 and 1 percentage points in countries where the ratio fell. The negative effects of growth and inflation on debt ratios were similar across both groups at 0.6 and around 1.5 percentage points of GDP.

Of the eight countries that had the largest increases in debt-to-GDP in 2024, five are geographically close to conflicts (Figure 1.14, Panel B). Israel saw the highest increase, exceeding seven percentage points of GDP. Estonia, Finland, Latvia and Poland, close to the conflict in Ukraine, were also significantly affected, with primary deficits contributing over 2.5 percentage points to their debt ratios—well above the 0.8 percentage point average for other OECD countries.

Figure 1.14. Decomposition of debt-to-GDP ratios

Deficits and rising effective interest rates are expected to offset the downward impacts of inflation and growth effects on debt ratios in 2024-25

Note: The decomposition of debt-to-GDP ratios combined central and general government information and only includes countries with the necessary data available in the OECD Economic Outlook for computations. Details can be found in Annex 1.A. The OECD in Panel F represents the sum of the outstanding marketable debt of the central government divided by the sum of GDP.

Source: 2024 OECD Survey on Central Government Marketable Debt and Borrowing; OECD (2024[1]), OECD Economic Outlook, Volume 2024 Issue 2, No. 116, https://doi.org/10.1787/d8814e8b-en; LSEG; national authorities’ websites; and OECD calculations.

This rise in debt-to-GDP ratios in most OECD countries in 2024, combined with substantial increases in 2020, has led to increases of over five percentage points of GDP in 25 OECD countries since 2019 (Figure 1.14, Panel F). Debt-to-GDP ratios were at least 20 percentage points higher in 2024 than in 2019 in Japan, New Zealand and the United States. In contrast, debt ratios declined over the same period in 13 OECD countries - all European and collectively accounting for less than 4% of the OECD’s outstanding marketable debt in 2024.23

The ability of debt management offices to influence interest payments and debt-to-GDP trajectories is limited. Their primary policy lever is the design of borrowing strategies which aim to minimise long-term costs while managing risks. To achieve this, sound debt management practices promote transparency and predictability, which help lower costs by securing liquidity premiums for the issuer. Box 1.3 examines how debt management offices have pursued this strategy and its implications for their ability to adjust issuance plans to react to changes in funding conditions that affect interest payments and debt-to-GDP trajectories.

Box 1.3. How and why sovereign issuers pursue regular and predictable issuance strategies

Given the recent rise in interest payments in most OECD countries, the issuance strategies of many sovereign issuers have come under greater scrutiny. Key criticisms include failing to lock in lower financing costs by issuing at longer maturities or not borrowing in excess of requirements when rates were lower, which could have mitigated the impact of higher rates on interest payments. As frequent borrowers, sovereign issuers focus on minimising costs and managing risks over the long-term by following a predictable and regular issuance strategy with a certain degree of flexibility. This box explains how this strategy works.

A predictable and regular issuance strategy consists of several key components. First, sovereign issuers enhance transparency by publishing borrowing plans and auction calendars in advance, in some cases including tentative auction sizes. Second, they issue regularly across a selection of maturity lines to support liquid benchmark yield curves. This involves reopening individual bond lines multiple times to increase their outstanding size before introducing new lines. Third, they ensure that issuance plans aim to meet the annual borrowing requirement each year, without deliberately over- or under-borrowing.

In addition to these practices, sovereign issuers aim to diversify their investor base to maintain stable demand. For most OECD issuers, this means issuing broadly across key maturities, helping to cover large borrowing needs while mitigating maturity concentration risk. Over-issuing in any particular segment of the curve can divert liquidity from other parts, potentially weakening future demand and conflicting with the long-term objectives of DMOs. It can also put pressure on security prices and increase underwriting risk, particularly for longer-dated bonds, as these tend to be more balance-sheet-intensive due to their higher duration.

The regular and predictable issuance strategy across the curve can increase demand for sovereign bonds and lower borrowing costs. This occurs through a reduction in liquidity premiums, making sovereign bond markets among the most liquid and least volatile markets. This approach requires adjustments to issuance strategies to be gradual, which is evident in the relative stability of auction sizes across issuers over time (Figure 1.15). Most changes aim at aligning issuance with borrowing requirements driven by fiscal needs. Adjustments to maturity or instrument composition are less common and are also typically done incrementally, by reducing the size of certain lines while simultaneously increasing others or by changing auction frequency. Substantial changes to planned auction sizes or dates are avoided to the extent possible, as they could signal instability or uncertainty to the market, potentially raising risk premiums and undermining investor confidence.

This strategy limits sovereign issuers’ ability to significantly alter issuance strategies in response to changed funding conditions, as seen in recent years. Adjustments to annual issuance plans do occur but are typically marginal and are a response to shifts in market conditions or borrowing needs. For example, in 2024, most OECD countries reported no modifications to various aspects of their issuance plans. Meanwhile, changes to long-term issuance strategies are typically rare – for instance only two OECD countries revised their long-term issuance strategies in 2024. Therefore, the ability to "lock in" lower financing costs in times of lower rates would require abandoning long-standing practices of being regular and predictable that have provided substantial long-term benefits.

Moreover, beyond the potential loss of credibility and negative effects on liquidity and pricing, any impact on borrowing costs from abrupt changes in issuance strategies would likely be minimal compared to external factors such as net borrowing needs and prevailing market conditions. Ultimately, the biggest drivers of borrowing costs are the overall borrowing requirement and market interest rates, both of which are largely determined by fiscal policy and expectations for future inflation levels and monetary policy.

Figure 1.15. Outstanding bond lines and average auction size

Sovereign issuers build liquid benchmarks and pursue a regular issuance strategy

Note: This Figure only includes fixed-rate bonds. Annex 1.C plots the same figure for additional countries.

Source: LSEG and OECD calculations.

Sovereign debt investor base amid ongoing quantitative tightening

Quantitative tightening and high net borrowing have led to a record high volume of sovereign bonds to be absorbed by the market

Central bank holdings of domestic sovereign bonds, which reached a historic high of nearly USD 16 trillion in 2021, have declined to just slightly more than USD 12 trillion in 2024 and are projected to fall by an additional USD 1 trillion in 2025 (Figure 1.16, Panel A). Central banks differ widely in their strategies to reduce these holdings, with some actively selling bonds and others partially or fully refraining from reinvesting proceeds from maturing bonds. Annex 1.D presents a summary of QT policies in selected OECD countries.

The pace of decline in sovereign bond holdings varies significantly among major OECD central banks due to differing QT policies and bond maturity profiles (Figure 1.16, Panel B).24 The Bank of Canada is projected to reduce its holdings by nearly 50% between its peak in 2021 and the end of its QT programme in 2025, the steepest decline among major central banks in that period. This is followed by the Bank of England at 40%, the Federal Reserve at 30%, and the ECB at 15% during the same period. The Bank of Japan, which announced its QT programme in mid-2024, is expected to reduce its sovereign bond holdings by roughly 7-8% by March 2026 (Bank of Japan, 2024[20]). It is worth noting that the pace of QT programmes has changed in the past and can change again going forward, with these projections for 2025 incorporating the available information on QT policies as of early 2025.

QT’s main implication for sovereign issuers is the impact on the net supply of fixed-rate bonds that needs to be absorbed by markets, which is expected to exceed USD 3 trillion annually for the first time in 2024-25 (Figure 1.16, Panel C). In comparison, net market absorption of fixed-rate bonds averaged zero in 2015‑19; was negative in 2020 with QE programmes more than offsetting the absorption of record high pandemic-related net borrowing, and exceeded USD 2 trillion annually in 2021-23 with some central banks ceasing bond purchases and starting QT.

Figure 1.16. Central banks’ holdings of domestic government securities and fixed-rate bonds to be absorbed by the market

A record volume of fixed-rate bonds has been absorbed by the market as investors bought bonds previously on central banks' balance sheets

Note: The 2025 values are forecasts based on the pace published on central bank websites and their maturity profiles. Panel B begins in 2021, the year when central banks' sovereign bond holdings peaked in Canada, the United Kingdom and the United States. Panels C and D cover only countries under the monetary policies of the central banks listed in Panels A and B, representing 93% of OECD central government marketable debt in 2024. Panel D uses OECD survey data as of June 2024 and includes only countries with significant central bank holdings. ECB holdings reflect only those under the PSPP and PEPP programmes.

Source: 2024 OECD Survey on Central Government Marketable Debt and Borrowing; OECD (2024[1]), OECD Economic Outlook, Volume 2024 Issue 2, No. 116, https://doi.org/10.1787/d8814e8b-en; LSEG; national authorities’ websites; Bank of Canada; Bank of England; Bank of Japan; European Central Bank; Federal Reserve website; and OECD calculations.

This trend of higher net supply of fixed-rate bonds needing to be absorbed by markets is widespread, affecting all 20 countries analysed. In 2015-19, the annual average net supply absorbed by the market was negative in 14 of these countries (Figure 1.16, Panel D), leading to a decline in market holdings of sovereign bonds over those five years. In contrast, in 2024, markets absorbed on average 18% of their holdings in new sovereign fixed-rate bonds. In 19 of the 20 countries, the fixed-rate bonds to be absorbed by the market as a share of market holdings was at least 10% in 2024. Hence, market participants now have a higher interest rate risk exposure.

The dollar duration of fixed-rate bond holdings of the market, which measures market exposure to interest rate risks, rose by approximately 75% from 2015 to 2024 (Figure 1.17, Panel A). This means that an increase in yields in 2024 would have had nearly twice the negative impact on the market value of fixed-rate sovereign bond market holdings than it would have had in 2015. For example, a 1% parallel shift higher in yields across the curve in 2015 would have reduced the mark-to-market value of sovereign bonds held by the market by approximately USD 1 trillion, but by around USD 1.75 trillion in 2024.

Figure 1.17. Exposure to interest rate risk, central banks’ holdings and maturity composition of fixed-rate debt

Market exposure to fixed-rate bond-related interest rate risk has risen significantly

Note: Dollar duration is used to aggregate outstanding debt stocks that consist of bonds with different maturities. It measures the approximate sensitivity of a bond portfolio's value to small changes in interest rates. Specifically, it approximates how much the portfolio’s value would decrease in absolute dollar terms for a one percentage point rise in interest rates. For example, a portfolio with a dollar duration of USD 10 billion would lose USD 100 million in value if interest rates increase by one percentage point (1% multiplied by USD 10 billion). The dollar duration calculations presented here are approximate: Due to the unavailability of secondary market data for all bonds, the duration of each bond was computed using the yield to maturity of the last primary market issuance. All panels cover only countries under the monetary policies of the central banks listed in Panel B, representing 93% of OECD central government outstanding marketable debt. Of these central banks, only the Bank of England has been actively selling bonds, while the others have been following a passive approach to reduce their balance sheets.

Source: 2024 OECD Survey on Central Government Marketable Debt and Borrowing; OECD (2024[1]), OECD Economic Outlook, Volume 2024 Issue 2, No. 116, https://doi.org/10.1787/d8814e8b-en; 2023 and 2024 OECD Survey on Liquidity in Government Bond Secondary Markets; LSEG; national authorities’ websites; Bank of Canada; Bank of England; Bank of Japan; European Central Bank; Federal Reserve website; and OECD calculations.

This rise in market exposure to interest rate risk has varied significantly across countries, with the largest increases since 2019 observed in Canada, the United Kingdom and the United States (Figure 1.17, Panel B). In these countries, dollar duration grew by more than 50% from 2019 to 2024. By contrast, the increase was more modest in the euro area and Japan, reflecting the relatively lower net borrowing needs in these regions and either slower-paced QT programmes (euro area) or later adoption (Japan).

Higher market exposure to interest rate risk can stretch investor appetite for higher-duration bonds and might, therefore, compel issuers to shorten their issuance profile. For instance, from 2019 to 2024, the share of T-bills in the outstanding debt stock rose more in Canada and the United States (where market duration exposure rose the most) than in most euro area countries and Japan (Figure 1.7, Panel C). In the United Kingdom, where the issuance share of T-bills declined during this period, the proportion of fixed-rate bonds with maturities exceeding 30 years dropped sharply, from roughly one quarter in 2015-19 to around 12% in 2024. This decline was offset by increased issuance of fixed-rate bonds with tenors of one to five years (Figure 1.17, Panel D).

The duration risk on central bank balance sheets can also affect sovereign issuers, with central bank losses prompting the suspension of profit remittances, or even indemnification in a few OECD countries (OECD, 2024[13]). Recently, higher interest rates have led to central bank losses by increasing the cost of interest-bearing liabilities and reducing the value of their bond holdings, particularly in cases where central banks have engaged in QE and/or used mark-to-market accounting. These losses halted profit remittances to governments and required indemnification by central governments in some countries. Such outcomes can impact fiscal positions and potentially increase borrowing needs.

Central banks still hold significant sovereign bond portfolios, and uncertainty remains over the endpoint for current QT programmes, which is one of the main factors affecting market duration exposure. Central banks’ sovereign bond holdings in 2024 accounted for about one-fifth of total outstanding sovereign debt on average across a selection of countries (Figure 1.17, Panel A). Although some market participants, such as in the United States, anticipate that this cycle of central bank balance sheet reduction will conclude sometime between mid-2025 and early 2026 (TBAC, 2025[14]), only Canada’s and Sweden’s central banks have currently announced a planned endpoint for their QT programmes, in March 2025 and the end of 2025, respectively (Bank of Canada, 2025[21]; Sveriges Riksbank, 2024[22]).

Price-sensitive investors now hold a larger share of the sovereign debt outstanding

In recent years, while central bank holdings of domestic sovereign debt have decreased, the share held by households and foreign investors has risen. In 25 selected OECD countries, representing nearly 90% of OECD central government outstanding marketable debt in 2024, central bank holdings fell from 29% in 2021 to 19% in 2024 (Figure 1.18, Panel A).25 Meanwhile, the households' share increased from 5% to 11%, and the foreign investors’ share rose from 29% to 34%.

Initially, households absorbed much of the net increase in sovereign bond supply, with foreign investors stepping in later. Households helped offset declining shares from financial corporations and central banks in 2022, and from central banks in 2023 and 2024, absorbing the equivalent of one-third of the reduction in central bank holdings in 2024 (Figure 1.18, Panel B). Foreign investors began increasing their share more significantly in 2024, when they absorbed much of the increase in net supply in 2024. Their current share still remains similar to or even below pre-pandemic levels, as the recent increase offsets the decline in their holdings during the pandemic and the period just after.

Both households and foreign investors from the private sector are considered to be more price-sensitive, with their continued demand likely dependent on relative yield levels. In many countries, households were drawn to sovereign bonds by retail-targeted products offered by DMOs, looking to utilise higher savings post-pandemic amid low returns on bank deposits (Box 1.4). Foreign investors include official sector demand for foreign reserves, banks, and asset managers, with the latter being particularly price-sensitive and generally attracted to higher yields (Figure 1.18, Panels C and D).

Price-sensitive investors look for relatively higher yields. These can increase term spreads and limit the pass-through of lower policy rates to longer-term rates. Precise investor preferences depend on risk appetite, liabilities, and investment horizons, leading to preferences for specific yield curve segments. Higher bond supply in specific segments thereby tends to cheapen bond prices. The elevated supply of long-term bonds, driven by QT and high net borrowing, has raised yields in that segment. Consequently, empirical estimates of term premia have risen significantly in 2024 (Villeroy de Galhau, 2025[23]). This weakens the impact of interest rate cuts on long-term rates with long end yields sometimes rising in response to policy rate cuts.

Figure 1.18. Investor base composition

Households have absorbed a major share of central banks’ domestic bond holdings since 2022, with foreign investors following in 2024

Note: Values refer to general government marketable debt as of Q2 2024 for Japan and Q3 2024 for others. Households include Non-Profit Institutions Serving Households. Panels A and B include 25 countries with nearly 90% of OECD central government marketable debt in 2024 – these are the countries listed in the next figure. In Panels C and D, survey answers are displayed as a share of the respondents to the questions.

Source: 2024 Survey on Liquidity in Government Bond Secondary Markets; 2024 OECD Survey on Central Government Marketable Debt and Borrowing; OECD (2024[1]), OECD Economic Outlook, Volume 2024 Issue 2, No. 116, https://doi.org/10.1787/d8814e8b-en; LSEG; national authorities’ websites; Bank of Canada; Bank of Japan; European Central Bank; Federal Reserve website; and OECD calculations.

Geopolitical factors can influence sovereign debt markets and macro-fiscal dynamics in at least two ways. First, supply shocks from conflicts could fuel inflation, prompting monetary tightening. In today’s environment of record-high market exposure to duration risk, this could stretch duration appetite, forcing sovereign issuers to shift issuance to shorter maturities or pay higher term premiums. Second, geopolitical tensions could reduce demand for sovereign bonds from non-politically aligned countries. For example, roughly one-third of euro area sovereign debt held by foreign investors comes from such countries, posing risks, especially for issuers whose bonds are not considered to be ‘safe-haven’ assets (Hudecz, Lauwers and Mimir, 2024[24]).

Country-specific data shows that since the introduction of QT programmes, the increase in foreign investors' holdings has offset the fall in central bank holdings of domestic sovereign bonds in more countries than household holdings did (Figure 1.19). Between June 2022 and June 2024, foreign investors' share of sovereign debt grew by more than one percentage point in 16 of the 25 countries analysed, and by over five percentage points in 8 of them. By contrast, the household share rose by more than one percentage point in 6 countries, exceeding five percentage points only in Italy and the United States (Box 1.4) in the same period.26 Thus, the increase in the household share exceeding that of foreign investors in aggregate is primarily due to increased household demand in these two large issuers.

Box 1.4. Selected cases of heightened retail demand for sovereign bonds in 2022-24

Several sovereign issuers have sought to better capture retail demand during the last couple of years against the backdrop of higher gross borrowing requirements, positive real yields, and quantitative tightening. The number of OECD countries running retail programmes increased from 14 in 2019 to 18 in 2024, the highest since the global financial crisis. Over the last year, retail bonds were the most newly introduced type of bonds, along with sustainable bonds. Consequently, the share of outstanding debt held by retail investors increased significantly in several OECD countries.

• Belgium and Italy have long-standing retail programmes that have attracted renewed interest via the issuance of new products. In Belgium, the successful issuance of the first one-year retail bonds in 2023 was done in part to stimulate competition in the savings market, with rates rising on products offered by the private sector following the issuance. This is one of the reasons retail demand was weaker in 2024. Meanwhile, Italy is now among the OECD countries with the highest share of sovereign debt held by households (around 14%) after Hungary and the United States, following successful issuances of new retail products since the COVID-19 pandemic.

• Greece and Spain have no retail programmes or products, but retail investors can participate directly in auctions. Greece introduced this option only recently, and it is limited to T-bills, while in Spain this is done via a well-established facility managed by the central bank. The retail share of the Greek debt stock increased from 1% in 2022 to 4% in 2024. In Spain, the retail share of gross borrowings increased from 0% in 2021 to 9% in 2023, with retail investors holding 40% of all outstanding Spanish T-bills as of July 2024.

• Slovenia issued its first-ever sovereign retail product in 2024 to help meet higher funding needs due in part to post-flooding reconstruction. The country also has a high level of domestic savings. The issuance aimed to increase investor base diversification by boosting domestic funding, increasing retail investors’ interest in capital markets, and offering an attractive alternative to commercial bank deposits. The issuance size was slightly higher than the initially planned amount, highlighting the demand from retail investors for sovereign debt.

• The United States was one of the countries with the highest retail demand for sovereign debt over recent years. The share of outstanding debt held by retail increased from 12% in 2022 to 15% in 2024. Demand was mostly for marketable bonds despite the availability of non-marketable retail products.

Source: Foxall, S. and Policino, L. (2025[25]), “Sovereign Retail Debt Programmes and Instruments: A review of country practices”, OECD Working Papers on Sovereign Borrowing and Public Debt Management, No. 10, https://doi.org/10.1787/e2a782d0-en.

While household shares grew in countries offering retail-targeted products or programmes, foreign investors significantly expanded their holdings, primarily in smaller markets where QT is taking place. On average, QT reduced central bank holdings of sovereign bonds by about 10 percentage points between 2022 and 2024 (Figure 1.17, Panel C). However, declines that exceeded this average were concentrated amongst a few smaller issuers, which account for only 2% of total sovereign debt in the OECD.27

Figure 1.19. Changes in investor base composition between June 2022-June 2024

Foreign investors absorbed the reduction in central bank holdings in most euro area countries, while household absorption was more prominent in a few countries that have retail programmes or products

Note: Values refer to the general government marketable debt. MFIs refer to Monetary Financial Institutions. “Other financial corporations” include pension funds and insurance companies for Canada and Japan.

Source: Bank of Canada; Bank of England; Bank of Japan; European Central Bank; Federal Reserve; and OECD calculations.

Liquidity in sovereign bonds and related markets

Liquidity is back to pre-pandemic levels, but volatility remains high

Ample liquidity is crucial for the smooth functioning of markets and the effective implementation of sovereign issuers’ strategies. When liquidity is low, trading costs rise as transactions can cause significant price fluctuations. Conversely, liquid markets can accommodate larger borrowing volumes with minimal impact on prices, allowing debt managers to execute funding strategies efficiently, even amid macro-financial uncertainty or volatility in borrowing needs.

In 2024, liquidity in sovereign bond markets was reported to have improved in 40% of OECD countries, making this the second consecutive year where an increased share of countries reported an improvement. 40% is also the highest level reported since 2018, the beginning of the series (Figure 1.20, Panel A). This followed significant deterioration in liquidity during the monetary tightening cycle that began in 2022. Improved liquidity is evident in the narrowing of bid-ask spreads, a key indicator of reduced transaction costs and greater market efficiency (Figure 1.20, Panel B).28

Liquidity in the repo and foreign bond markets for domestic sovereign securities has improved in over one-third of OECD countries, with a record-low number of countries reporting declines (Figure 1.20, Panel A). The growing share of foreign investors in sovereign debt holdings across several countries underscores the importance of robust liquidity in foreign bond markets (Figure 1.19).

Repo markets serve two vital functions in sovereign bond markets. In the primary market, repo allows primary dealers to fund their bids at bond auctions and their underwriting positions in syndicated bond issues at a reasonable cost, thereby providing cheaper and less risky access to the capital markets for issuers. In the secondary market, they help ensure liquidity by enabling market-makers to offer ‘immediacy’ to investors by continuously quoting prices at which they are committed to trade on demand. In many countries, banks have traditionally served as primary dealers, while in a few cases, non-bank institutions also fulfill this role (e.g. Canada, Germany and the US).

Figure 1.20. Liquidity conditions, bid-ask spreads and five-year bond-swap spreads

While liquidity has improved in sovereign bonds and related markets, bond-swap spreads have dropped to decade-low levels

Note: Panel B includes all OECD countries except Estonia, Korea, Latvia and Lithuania due to unavailability of data. The swap spread in Panel C is the difference between the fixed-rate leg of a 5-year interest rate swap and the yield of a 5-year sovereign bond.

Source: 2018-2024 Survey on Liquidity in Government Bond Secondary Markets, LSEG and OECD calculations.

Derivative markets are also essential to primary dealers’ intermediation activities. Primary dealers and other market participants rely on interest-rate swaps and future contracts to hedge market risk. Swaps convert fixed-income flows into floating-rate ones, thereby neutralising the duration risk of bond holdings. By offsetting declines in the mark-to-market value of bonds caused by rising interest rates, swaps help mitigate potential losses.

Despite improved sovereign bond and repo market liquidity, balance sheet constraints remain challenging for primary dealers, with around 40% of debt management offices in OECD countries reporting concerns over their profitability.29 Stricter post-global financial crisis regulatory requirements under Basel III (see Box 1.5 for the US case) and record-high duration risk exposure from sovereign bonds (Figure 1.17) have raised primary dealers’ warehousing costs. During QE programmes, central banks absorbed significant sovereign bond volumes in the secondary market, reducing market volatility and easing primary dealers' operations. As central banks have shifted to QT, primary dealers must, at least temporarily, warehouse a larger volume of bonds, increasing their nominal capital requirements. Without additional capital, they face opportunity costs for deploying more of their limited balance sheets to market making in sovereign bonds.

These rising balance sheet costs are reflected in historically low and even negative bond-swap spreads in some markets (Figure 1.20, Panel C). As there is an arbitrage relation between swaps and government bonds, swap rates and bond yields should not normally deviate much, while frequently being positive because of bonds’ collateral value. Negative spreads are relatively uncommon and signal pressures in government debt absorption. By entering swaps paying fixed rates below the yields on their bond holdings, primary dealers hedge market (mostly duration) risk and can earn profits to offset the opportunity costs associated with allocating their balance sheets to sovereign bonds (BIS, 2024[18]). Additionally, primary dealers might offload inventories to more price-sensitive market participants, such as hedge funds, at significant discounts, thereby depressing market prices. These actors are then partially taking over the warehousing role that is traditionally undertaken by primary dealers.

Market volatility, which surged with the start of the monetary tightening cycle in 2022, remains above pre-pandemic levels across various countries and maturities (Figure 1.21). This is also evidenced by sharp yield movements in response to adverse events (Gomez-Cram, Kung and Lustig, 2024[26]). Heightened volatility has been affected by geopolitical and macro-financial uncertainty. Geopolitical tensions, including Russia’s full-scale invasion of Ukraine and the conflict in the Middle East, have disrupted global trade and energy markets, pushing up energy prices and inflation, altering the macro-economic environment (OECD, 2024[1]). These challenges are compounded by elevated debt-to-GDP ratios, leading to reduced fiscal capacity to absorb shocks.

Figure 1.21. Market volatility in bond yields for selected countries and maturities

Secondary market volatility remains above pre-pandemic levels across various countries and maturities

Source: LSEG and OECD calculations.

One potential implication of heightened volatility for sovereign issuers is an increase in auction tails. Auction tails measure the difference between the yield associated with the average accepted price and the yield associated with the lowest accepted price at multi-price auctions. They are, therefore, key indicators of demand and market functioning. Larger tails reflect a wider range of bids, indicating divergence among market participants in pricing bonds, and suggest uncertainty or mixed market sentiment. In contrast, a small or non-existent tail implies favourable market conditions, with greater certainty about pricing and stronger, more uniform demand.

Auction tails, where reported, have generally risen across tenors for larger OECD issuers since the pandemic and remain significantly higher than levels over the past decade (Figure 1.22). This tends to reflect elevated uncertainty in price discovery and is often accompanied by underpricing (i.e. the issuer only being able to sell the securities at discounts compared to prevailing market prices). Thereby, increased volatility and uncertainty lead to higher issuance costs.30

Figure 1.22. Auction tails for selected countries

Auction tails were mostly higher in 2023-24 than in the period before the pandemic

Note: This figure includes only countries that publish auction results with sufficient detail to calculate auction tails. Each dot is an auction of a fixed-rate bond of the respective tenor. The differences in the years displayed are due to data availability. In the United Kingdom, the data encompasses the 5-year bond as the benchmark yield, instead of the 2-year bond.

Source: Official authorities’ websites and OECD calculations.

Sovereign issuers have implemented several measures to enhance market liquidity, including structural changes and adoption of central clearance in some countries

Debt management offices implemented various measures to enhance market liquidity in 2024. This includes not only pursuing a regular and predictable issuance strategy but also various other measures (see Box 1.3). The most implemented measure in the OECD in 2024 was regularly tapping "on-the-run" securities (22 countries), ensuring the regular supply of actively traded bonds. Buyback and switch operations were also widely used (by 21 countries), allowing debt managers to smooth their redemption files and support market liquidity.31 Ad hoc taps of “off-the-run” securities were conducted in 18 countries in 2024, providing additional liquidity in certain bonds when needed. Additionally, 11 countries utilised repos, reverse repos, or securities lending facilities to facilitate trading and strengthen market liquidity.

Box 1.5. Primary dealer balance sheet capacity in the United States

Primary dealers’ (PDs) activities in both primary and secondary markets tend to increase with the amount of outstanding treasury securities, consistent with their roles as intermediation providers in the primary and secondary markets. In the primary market, PDs are required to participate in treasury auctions, while in the secondary market, they facilitate trading by taking bonds into their inventory and financing clients' purchases. In addition, they engage in repo markets to fund their operations and lend cash to clients.

As a result, the heightened supply of US Treasuries due to higher borrowing and QT has led to an expansion in PDs’ market intermediation since mid-2022. This can be seen by both their increasing gross position in US Treasuries and their respective financing (Figure 1.23, Panel A). As the supply of bonds and the demand for trading them from market participants grows, PD balance sheets are likely to edge closer to their maximum capacity, which could limit their willingness to support the US Treasury market.

As most PDs are banks, they are constrained by regulatory capital constraints. The supplementary leverage ratio (SLR), established in 2014 as part of the Basel III reforms, has been the most binding requirement for PDs since the global financial crisis. It measures a bank's Tier 1 capital relative to its total leverage. It is particularly relevant for treasury market intermediation as it can impose a high regulatory capital requirement for a relatively low-risk but high-volume activity. Most PDs are subject to the minimum SLR of 5%, a requirement for those affiliated with US Global Systemically Important Banks.

Therefore, this higher supply of bonds and trading in the US Treasury market has increased the use of PDs' balance sheets for US Treasury operations and reduced their regulatory headroom. The headroom of the six largest PDs in US Treasuries against the minimum SLR has, since 2021, been lower compared to the pre-pandemic level (Figure 1.23, Panel B).

Reduced headroom for operations can amplify volatility spikes and increase market intermediation by other players, such as hedge funds. In times of stress, PDs may step back from intermediation before reaching these limits. Empirical evidence suggests that this impaired intermediation amplifies the yield response to net shifts in demand, increasing volatility, (Brauning and Stein, 2024[27]) and can lead to significant dysfunctionality in markets in times of crisis (Duffie and Van Tassel, 2023[28]). Moreover, if PD balance sheets are constrained, non-bank players such as hedge funds may need to step in, deploying repo leverage to assume positions like PDs. This could contribute to more volatility in the future.

Figure 1.23.  US primary dealers’ intermediation activity and headroom against the minimum SLR

Dealers are doing more intermediation in US Treasuries whilst headroom on their balance sheets is diminishing

Note: In Panel B, BofA, Citi, GS, JPM, MS and WFC respectively refer to BofA Securities, Citigroup Global Markets, Goldman Sachs, J.P. Morgan Securities, Morgan Stanley and Wells Fargo Securities. The headroom against minimum SLR is computed as the difference between each primary dealer and the minimum regulatory SLR. Data as of Q2 2024. Panel A as of July ‘24, panel B as of June ’24.

Source: Federal Reserve and OECD calculations.

In addition to these measures, some sovereign issuers are putting in place structural changes to improve market transparency and efficiency. One example is the United States, where cash and repo transactions will be conducted exclusively via central clearing from December 2026 and June 2027, respectively (SEC, 2025[29]).32 Enhancing the volume of centrally cleared transactions could help mitigate risks to market functioning by freeing up more of primary dealers’ balance sheets and allowing all-to-all trading (OECD, 2024[13]). However, central clearing of all government bond and repo transactions would not fully eliminate financial market risk but rather change its nature with higher margin calls and challenges with one-sided flows that do not net out (Aquilina, Scheicher and Schrimpf, 2024[30]).

Another key area of structural reform is improving market transparency. These reforms aim to provide more comprehensive and higher-quality information on market trading—such as prices and positions—to support price discovery and risk management for market participants. Enhanced transparency would address common issues, including blind spots in specific market segments and fragmentation of market data. These challenges are particularly prevalent in sovereign bond markets due to the over-the-counter nature of trading and the reliance on primary dealers for intermediate trades, in contrast to the all-to-all trading model typically used in stock trading through exchanges.

More specifically, in terms of market transparency (and oversight), both the United States and the euro area conducted or plan to conduct changes. Reforms implemented in the United States Treasury market since 2020 have enhanced transparency by increasing the frequency and detail of trading data and expanding risk monitoring for hedge funds and repo transactions, while planned reforms focus on improving oversight of non-centrally cleared transactions and strengthening reporting on fund operations and trading practices.33 In the euro area, the European Commission aims to enhance transparency in sovereign bond markets by strengthening pre- and post-trade data disclosure requirements, revising the deferral regime, and ensuring non-discriminatory access. These measures are designed to align with the implementation of the consolidated tape, which will provide a unified source of market data to improve transparency and accessibility (ESMA, 2024[31]) .

While increased transparency delivers benefits, a cautious and gradual approach is necessary given the impact of reforms and the fact that once they are implemented, reversing them could cause market dysfunctionalities. Some potential problems might arise due to the principal-client nature of sovereign bond markets. For instance, disclosing the volume data of trades in real-time could allow market participants to widen bid-ask spreads in anticipation of trades from a participant that has made a large operation. This is especially the case with primary dealers, which often warehouse the risk from large trades before redistributing it. This makes consultation with market participants, including debt management offices and primary dealers, as well as gradual implementation, key to calibrating the optimal level of transparency while preserving market efficiency.

References

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Annex 1.A. Methods and sources

Definitions and concepts used in the Sovereign Borrowing Outlook Survey

The Borrowing Outlook survey collects gross borrowing requirements, redemption and outstanding debt amounts with a breakdown of these items by maturity, currency, interest rate types and ESG-labelling (i.e. sustainable bonds). It also collects data on DMOs’ holdings, NextGenerationEU loans and country-specific methodological aspects. It uses the core definition of sovereign debt, and central government marketable debt, mainly due to its comparability and collectability. This measure, directly linked to the central government budget financing, enabled the OECD to collect not only for realisations but also for estimates of government borrowing requirements, funding strategies, as well as outstanding debt with instruments, maturity and currency types.

Coverage of institutions: Central government

The coverage of institutions by debt statistics varies from public sector to central government. Public sector represents the broadest institutional coverage, as it includes local governments, state funds financial and non-financial public corporations as well as central government debt. The general government definition, which is used for example by the OECD System of National Accounts (SNA), consists of central government, state and local governments and social security funds controlled by these units. Central government covers all departments, offices, establishments and other bodies classified under general government, which are agencies or an instrument of the central authority of a country, except for separately organised social security funds or extra-budgetary funds. In terms of layers of coverage of institutions, central government stands out as the core definition. Debt of the central government is raised, managed and retired by the national DMOs on behalf of the central government. Hence, the advantage of this relatively narrow definition of debt is that it enables countries to provide comparable figures, in particular for the purpose of estimations.

Coverage of types of debt: Marketable debt

In terms of instruments, liabilities can be in the form of debt securities, loans, insurance, pensions and standardised guarantee schemes, currency and deposits, and other accounts payable. Debt items can be classified as marketable and non-marketable debt. While marketable debt is defined as financial securities and instruments that can be bought and sold in the secondary market, non-marketable debt is not transferable. For example, bonds and bills issued in capital markets are marketable debt; multilateral and bilateral loans from the official sector are non-marketable debt.

The Borrowing Outlook survey focuses on marketable debt instruments, while most government debt statistics (e.g. OECD SNA, EU Maastricht debt, and IMF Public Sector Debt Statistics) cover both marketable and non-marketable debt items. OECD governments are financed predominantly by marketable debt instruments. This is a central definition for every analysis concerning various issues around debt management including borrowing conditions, portfolio composition, investor preferences and market liquidity. An advantage of using this definition is to indicate to investors which instruments are available to trade in the secondary markets, and which are not. Another reason is to enable the issuer to calculate different characteristics of the debt, such as duration or time to maturity, which in the case of non-marketable debt would present a difficult issue.

Terminology

• The standardised gross borrowing requirement (GBR) for a year is equal to the net borrowing requirement during that year plus the redemptions of long-term instruments in the same year and the redemptions of short-term instruments issued in the previous year. Therefore, this indicator captures the issuances of all securities excluding those that were issued and redeemed in the same calendar year. In other words, the size of GBR in the calendar year amounts to how much the DMO needs to issue in nominal terms to fully pay back maturing debt issued in previous years plus the net cash borrowing requirement through any issuance mechanism.

• Net borrowing requirement (NBR) is the amount required to finance the current budget deficit. While the refinancing of redemptions is a matter of rolling over the same exposure as before, NBR refers to new exposure in the market, or new borrowing.

• Gross debt, or debt stock, corresponds to the outstanding debt issuance at the end of calendar years. This measure does not take the valuation effects from inflation and exchange rate movements; thus, it is equal to the total nominal amount that needs to be redeemed.

• Redemptions refer to the total amount of the principal repayments of the corresponding debt including the principal payments paid through buy-back operations in a calendar year.

Regional aggregates

• Total OECD area denotes the following 38 countries: Australia, Austria, Belgium, Canada, Chile, Colombia, Costa Rica, Czechia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Latvia, Lithuania, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Türkiye, the United Kingdom and the United States.

• OECD accession candidate countries include Argentina, Brazil, Bulgaria, Croatia, Indonesia, Peru, Romania and Thailand.

• The G7 includes Canada, France, Germany, Italy, Japan, the United Kingdom and the United States.

• The OECD euro area includes 17 countries: Austria, Belgium, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, the Netherlands, Portugal, the Slovak Republic, Slovenia and Spain.

• The euro (EUR) is the official currency of 20 out of 27 EU Member States. These are collectively known as the euro area. The euro area countries are Austria, Belgium, Croatia, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, the Slovak Republic, Slovenia and Spain. In this report, the euro area covers only the countries that are simultaneously in the euro area and in the OECD.

Calculations and data sources

• For consistency reasons, estimates that are presented as a percentage of GDP use GDP estimates from the last OECD Economic Outlook in the previous year (i.e. December 2024 for this publication) and are calculated using nominal GDP data.

• Debt is measured as the nominal value of current outstanding central government debt. Nominal value, the undiscounted amount of principal to be repaid, does not change except when there is a new issue of an existing instrument. This coincides with the original promise (and therefore contractual obligation) of the issuer. DMOs often use face value when they report how much nominal debt will mature in future periods. One important reason for using face value is that it is the standard market practice for quoting and trading specific volumes of a particular instrument.

• Currencies are converted into USD using the respective historical exchange rates, with the data sourced from London Stock Exchange Group (LSEG).

• All figures are expressed in calendar years unless specified otherwise.

• All statistics (e.g. median, averages) displayed in figures consider only the countries in the figure and may not include all OECD members.

• Aggregate figures for gross borrowing requirements (GBR), net borrowing requirements (NBR), central government marketable debt, redemptions, and debt maturing are compiled from answers to the Borrowing Survey. The OECD Secretariat inserted its own estimates/projections in cases of missing information for 2024 and 2025, using publicly available official information on redemptions and central government budget balances. Where government plans have been announced, but not incorporated into financing plans as of the end of December 2024, they are not included in the projections presented in this publication. Also, the latest estimates of government net lending in the OECD Economic Outlook database are used in estimating some missing data.

• Both the 2024 OECD Survey on Primary Market Developments and the 2024 OECD Survey on Liquidity in Secondary Government Bond Markets were carried out in October 2024.

Revised definitions

• Inflation-linked securities are instruments with coupon and/or principal payments that are linked to an inflation index. The data includes accrued inflation for all years up to and including the current year of the survey as of the reporting date.

• Variable rate notes have a floating or variable interest rate or coupon rate. It is a long-dated debt security whose coupon is refixed periodically on a “refix date” by reference to an independent interest rate index such as SONIA or Euribor. For example, medium and long-term floating rate notes (FRNs, colloquially known as floaters) are debt obligations with variable interest rates that are adjusted periodically (typically every one, three, or six months). The interest rate is usually fixed at a specified spread over one of the interest rate indices. For projections of variable rate debt, the rate at the level of the last settled coupon is used.

• Average term-to-maturity figures follow the same coverage described at the beginning of this Annex, with country-specific methods detailed below:

  • Germany: Calculation excluding holdings in own stock. Inflation-linked securities are weighted with 0.75.

  • Hungary: Data excludes retail securities, locally issued FX bonds, and loans and, since 2020, also excludes the non-marketable bonds issued to municipalities. Data includes cross-currency swaps.

  • Italy: Liabilities under the Support to Mitigate Unemployment Risks in an Emergency and Next Generation EU programmes (which would raise the figure to 7.4) are excluded.

  • Japan: The Ministry of Finance announces ATM, based on Fiscal Year, not Calendar Year. Figures from 2006 to 2023 exclude saving bonds. The figure for 2024 is estimated and includes saving bonds.

  • Netherlands: Figures are based on outstanding T-bills and bonds, and do not include outstanding commercial paper.

  • New Zealand: Figures include all New Zealand Government Bonds, T-bills and Euro-Commercial Paper computed using the exchange rate as of 31 December.

  • Sweden: Time to maturity (uplifted amount at current exchange rate) figures include government bonds, inflation-linked bonds, public bonds, foreign currencies, green bonds and T-bills.

  • United Kingdom: ATM is weighted by the nominal amounts outstanding of gilts and T-bills issued for debt management purposes, as of the reporting date. Nominal amounts of gilts include government holdings; nominal values of index-linked gilts also include accrued inflation as of the reporting date.

Debt decomposition model

Single countries

To compute the debt-decomposition of OECD countries, this chapter adopted the methodology outlined by Escolano (2010[32]) and used the equation below to capture the change in debt-to-GDP ratio between time t and t-1:

$d-d_{\left(t-1\right)}= \frac{ip}{\left(1+y\right)}* d_{\left(t-1\right)}- \frac{\mathrm{\pi }}{\left(1+y\right)}*d_{\left(t-1\right)}- \frac{g}{1+g}*d_{\left(t-1\right)}- pb+sf$

Where:

• d is the central government debt stock from the Borrowing Survey expressed as a ratio to GDP from OECD (2024[1])

• ip is the effective interest rate, expressed as general government gross interest expenses from OECD (2024[1]) in time t as a ratio of d in time t-1

• y is the nominal GDP growth rate from OECD (2024[1]) between time t and t-1

• π is inflation, defined as the change in GDP deflator from OECD (2024[1]) between time t and t-1

• g is the real GDP growth rate from OECD (2024[1]) between time t and t-1

• pb is the general government's primary balance as a ratio of GDP, both from OECD (2024[1])

• sf denotes the stock-flow adjustments.

OECD area

For the OECD area decomposition, the following variables are used:

• d is the sum of each country's central government debt stock divided by the sum of each country’s GDP

• ip is the sum of each country's general government gross interest payments divided by the sum of each country’s d at time t-1

• y is the growth rate of the sum of each country’s nominal GDP

• π is the sum of each country’s π, weighted by GDP

• g is the sum of each country’s g_, weighted by GDP

• pb is the sum of each country’s general government primary balance, divided by the sum of each country’s GDP

• sf denotes the stock-flow adjustments

To compute OECD area values, country figures were converted into US dollars using the year-end exchange rates, sourced from LSEG.

Further specifications

Computations did not cover CHL, COL, CRI, ISR, MEX and TUR due to missing general interest expenses data. Thus, computations cover 97% of total OECD central government debt.

Annex 1.B. Yield curves for selected countries

The figure below shows the average daily yields over the last quarter of the year. For 2015-19, the values represent the average of the quarterly averages over the five years from 2015 to 2019. Selected OECD countries are those with available data in LSEG.

Annex Figure 1.B.1. Yield curves for selected countries

Source: LSEG and OECD calculations.

Annex 1.C. Auctions size analysis for selected countries

The figure below shows the average auctions size for fixed-rate bonds by tenor. Selected countries are those for which data is available.

Annex Figure 1.C.1. Average auction size by tenor for selected countries (1 out of 2), 2000-24

Source: LSEG and OECD calculations.

Annex Figure 1.C.2. Average auction size by tenor for selected countries (2 out of 2), 2000-24

Source: LSEG and OECD calculations.

Annex 1.D. A summary of quantitative tightening policies in selected countries

The bullet points below summarise quantitative tightening (QT) policies in selected countries, focused on government bond holdings and ordered by the start of their programmes.

• Australia: In February 2022, the Reserve Bank of Australia ceased bond purchases. It subsequently decided to hold the bonds to maturity, allowing its bond holdings to decrease gradually, and is reviewing this approach periodically (Reserve Bank of Australia, 2022[33]).

• New Zealand: In February 2022, the Reserve Bank of New Zealand agreed to initiate a gradual reduction of bond holdings by selling a limited number of securities in order of maturity date, starting with the longest maturity, while allowing shorter-maturity bonds to mature without reinvesting the proceeds (Reserve Bank of New Zealand, 2022[34]).

• The United Kingdom: In February 2022, the Bank of England’s Monetary Policy Committee ceased reinvesting the proceeds from its maturing government bond holdings. In September 2022, the Committee decided to commence selling government bonds from November onwards, with a quarterly schedule targeting short- to medium-term maturity sectors (3 to 20 years). In September 2023, it decided to reduce the stock of government bonds by GBP 100 billion from October 2023 to September 2024. In September 2024, it decided to reduce the stock of government bonds by an additional GBP 100 billion from October 2024 to September 2025 (Bank of England, 2022[35]; 2022[36]; 2023[37]; 2024[38]).

• Canada: In April 2022, the Bank of Canada discontinued its bond purchase programme, meaning that proceeds from maturing bonds would not be reinvested (Bank of Canada, 2022[39]). In January 2025, it announced the plan to complete its balance sheet normalisation programme, ending QT in March 2025 (Bank of Canada, 2025[40]).

• The United States: In May 2022, the Federal Reserve Board communicated that reductions of the System Open Market Account’s (SOMA) balance sheet would be gradual, predictable, and achieved through stopping reinvestments from the proceeds of matured bonds with a monthly cp of USD 30 billion for the first three months, USD 60 billion until May 2024, and USD 25 billion since then (Board of Governors of the Fed, 2022[41]; 2024[42]).

• Sweden: In September 2022, Sweden’s central bank (Sveriges Riksbank) announced that the asset purchase programme was expected to cease at year-end, leading to a gradual decline in its balance sheet across all maturities. In February 2023, the bank announced that it would have started selling government bonds as of April 2023. In November 2024, the bank announced that sales were expected to be concluded at the end of 2025 and that it aimed to keep in its balance sheet SEK 20 billion of long-term government bonds (Sveriges Riksbank, 2022[43]; 2024[22]; 2023[44]).

• Euro area: In December 2022, the ECB Governing Council decided that the holdings of government bonds purchased through the Asset Purchase Programme (APP) would decline at a measured and predictable pace, as proceeds from matured securities would be only partially reinvested starting from March 2023. In May 2023, the Council decided that APP holdings would not be reinvested at all starting from July 2023. In December 2023, the Council decided that it would reduce the Emergency Purchase Programme (PEPP) portfolio during the second half of 2024 and to fully discontinue reinvestments at the end of 2024 (ECB, 2022[45]; 2023[46]; 2023[47]).

• Japan: In July 2024, the Bank of Japan decided to reduce the amount of its government bond purchases at a gradual pace each quarter until March 2026 (Bank of Japan, 2024[48]).

Notes

← 1.  Adjusted by the United States Consumer Price Index (CPI).

← 2.  This refers to the average gross borrowing requirement-to-GDP ratio for the period 2015-19.

← 3.  The 2015-19 average is CPI-adjusted to 2024 real values.

← 4.  Discrepancies between the general government deficit and the central government net borrowing requirements from the markets arise from three primary sources, complicating the precise attribution to cash balance management. Firstly, there is a scope difference: net borrowing requirements in this analysis refer to the central government, while the fiscal deficit covers the general government, including state and local governments and social security funds. Secondly, the central government’s marketable debt may not grow alongside the deficit if fiscal needs are met by selling financial assets, such as real estate or state-owned enterprises. This also includes the use (drawdown) of cash balances. Lastly, governments may increase net liabilities through non-marketable debt instruments, such as loans or arrears. Despite these sources of differences, in most OECD countries, subnational governments generally run fiscal surpluses or deficits much smaller than central government fiscal balances. At the same time, asset sales and non-marketable debt funding are relatively uncommon. Consequently, a significant part of the discrepancy can be attributed to the use of cash balances under normal conditions.

← 5.  Gross borrowing requirements have grown unevenly across countries over recent years, with the United States share increasing significantly. More specifically, the United States' share rose from around 40% in 2007-08 to 50% in 2017 and is expected to reach nearly 70% in 2024. This growth accelerated after the mid-2010s, driven by higher fiscal deficits and faster GDP growth (both when compared to the OECD average), along with US dollar appreciation. The latter alone has accounted for approximately one-third of the nearly 20 percentage points rise since 2017.

← 6.  Issuance strategies are shaped not only by the risk-cost trade-off but also by market demand and the flexibility of different instruments. Uneven demand across maturities and the need to maintain market liquidity influence sovereign issuance choices. Longer-dated securities, often favoured by pension funds and insurance companies, face lower overall demand, limiting strategic flexibility. In addition, debt managers frequently reopen individual lines to build them up to a benchmark size, which supports liquidity. However, this can be costly, particularly for long-dated securities issued below par, where higher duration amplifies price sensitivity to interest rate changes, reducing cash proceeds when rates rise. In contrast, shorter-dated instruments offer greater issuance flexibility, allowing for larger volumes to be issued at short notice, often without requiring syndication.

← 7.  For these funds, T-bills are among the limited types of suitable collateral and play a crucial role in managing the maturity of their holdings, especially as Government-Sponsored Enterprises' (e.g. Fannie Mae and Freddie Mac) balance sheets shrank and the availability of agency paper decreased.

← 8.  Liquidity buffers, typically built up through the proceeds of bond issuance, are often invested in short-term instruments or deposited with central banks, which usually earn lower short-term rates compared to long-term borrowing costs.

← 9.  The United States only started their variable-rate program in 2014-15, meaning comparisons with the entirety of the last decade would be distorted.

← 10.  Note that the Sovereign Borrowing Outlook uses the standard methodology to calculate gross borrowing and refinancing needs, excluding the refinancing of T-bills issued and maturing within the same year. For further details, see Annex 1.A.

← 11.  This analysis does not include Chile and Estonia due to data availability.

← 12.  Term spreads provide key insights into market expectations for monetary policy and economic conditions. They include the compensation the market prices for holding long-term bonds instead of rolling over short-term risk-free securities, accounting for the risk that long-term bond returns may fall below cumulative future short-term returns. In OECD sovereign bonds, where credit risk is negligible, term spreads mainly reflect expectations of short-term interest rates and duration risk—the sensitivity of bond prices to yield curve changes. Given that future interest rates are affected by future decisions of central banks, which are navigating a trade-off between controlling inflation while avoiding causing unnecessary damage to the economy (BIS, 2022[49]), the shape of the yield curve is affected primarily by expectations on inflation, but also on the growth and employment outlooks.

← 13.  A yield curve can shift in three main ways: level, steepness, and curvature (Litterman, Robert and Scheinkman, 1991[50]). A level shift occurs when yields across all maturities move up or down by a similar magnitude, reflecting parallel changes. A steepness shift happens when short-term yields move more than long-term yields (or vice versa), causing a non-parallel change in the curve's slope. Lastly, a curvature shift involves changes concentrated in the mid-range of maturities, where intermediate yields rise or fall relative to short- and long-term rates.

← 14.  The neutral rate of interest is the real short-term interest rate expected to prevail when there is no or a negligible output gap in the economy and inflation is stable (NY Fed, 2024[51]).

← 15.  Real yields represent the rate of return on investments after adjusting for inflation. They can be measured as the difference between nominal yields and breakeven inflation, which reflects inflation expectations and the inflation risk premium—the additional compensation the market prices for locking in returns based on current inflation forecasts, particularly under conditions of future inflation uncertainty.

← 16.  Break-even inflation data is available only for countries with outstanding inflation-linked bonds that allow for a computation of ten-year inflation expectations.

← 17.  As of this report's publication, the latest available data on government expenditure by function is from 2022.

← 18.  This refers to movements in general government gross interest payments. The movement of other interest payment indicators, such as those specific to central government, can diverge. For instance, in Sweden, central government interest payments declined in 2024 (Riksgalden, 2025[52]).

← 19.  The gap between the OECD aggregate and the median interest payments-to-GDP ratio is mainly driven by the fact that three large issuers—Italy, the United Kingdom, and the United States—are among the six countries with the highest ratios.

← 20.  This refers to the share of fixed-rate debt issued prior to 2024 with yields below 1%.

← 21.  This refers to the share of fixed-rate debt issued before 2024 with yields above 4%.

← 22.  In 2026, the OECD forecasts an increase in 10-year rates—a maturity more representative of the OECD borrowing profile than short-term rates—in 23 out of 38 countries. In contrast, declines are anticipated more broadly for short-term rates, which account for only a minority of OECD borrowing (OECD, 2024[53]).

← 23.  These are Belgium, Denmark, Iceland, Ireland, Lithuania, Netherlands, Norway, Poland, Portugal, Slovenia, Sweden, Switzerland, and Türkiye.

← 24.  The maturity profile of central banks’ sovereign bond holdings were explored in the 2024 edition of the Sovereign Borrowing Outlook (OECD, 2024[13])

← 25.  The latter information refers to the general government marketable debt. General government marketable debt is mostly composed of central government marketable debt. In 18 out of the 25 countries analysed, almost all (more than 95%) of general government marketable debt is attributed to central governments as of Q2 2024 or latest. Subnational governments account for roughly half of the general government marketable debt in Canada, around one-quarter in Denmark, one-fifth in Germany and Sweden, 10% in Belgium and France, and 6% in the United States. 

← 26.  The United States household holdings data encompass domestic hedge funds, private equity funds, and personal trusts.

← 27.  These countries are Canada, Estonia, Greece, Latvia, New Zealand and Sweden.

← 28.  A bid-ask spread is the amount by which the ask price exceeds the bid price for a bond in the secondary market. The bid-ask spread is essentially the difference between the highest price that a buyer is willing to pay for an asset and the lowest price that a seller is willing to accept.

← 29.  2023 Survey on Liquidity in Government Bond Secondary Markets.

← 30.  For example, in the case of auctions of German federal government bonds, a one-percentage-point increase in annualised option-implied yield volatility leads to auction bid yields which are, on average, 0.3 basis points (0.03%) higher (Shida, 2023[54]).

← 31.  This includes the new US buyback programme to enhance liquidity and improve cash management. Liquidity support buybacks, launched in May 2024, provide predictable opportunities for market participants to sell off-the-run securities. By October 2024, the US Treasury had conducted about 20 liquidity support operations, purchasing nearly USD 30 billion in securities while receiving offers totalling approximately USD 150 billion. Additionally, cash management buybacks, aimed at reducing volatility in cash balances and bill issuance, commenced in September 2024, with the US Treasury conducting four cash management-related buyback operations, purchasing around USD 20 billion. While the program is small relative to the overall size of the US sovereign bond market, it is not insignificant compared to the outstanding amount of certain bond lines, significantly impacting targeted lines (TBAC, 2025[14]).

← 32.  This will exclude transactions where one counterparty is a central bank, sovereign entity, international financial institution, or natural person.

← 33.  Recent regulatory changes in the United States have significantly enhanced market transparency and oversight in the Treasury market. Since 2020, the Financial Industry Regulatory Authority (FINRA) has progressively increased the frequency and detail of its Trade Reporting and Compliance Engine (TRACE) reports, moving from monthly to weekly publication and, in 2024, introducing end-of-day data for on-the-run securities with capped trade sizes, complementing aggregate statistics. Meanwhile, the Office of Financial Research (OFR) launched a hedge fund monitoring tool in 2024 to assess risks related to liquidity and leverage, and the Fed extended PD reporting to separately list General Collateral and triparty repo transactions for improved market monitoring. From December 2024, the OFR mandated daily reporting of non-centrally cleared bilateral repo transactions by selected broker-dealers and financial entities, capturing approximately 75% of volume post-central clearing. Planned reforms include the US Securities and Exchange Commission (SEC) that will enforce dealer registration rules from May 2025, requiring significant liquidity providers to register, join a self-regulatory organisation, and comply with associated regulations; and in March 2025, the SEC, Commodity Futures Trading Commission, and Financial Stability Oversight Council that will implement enhanced reporting, improving data on large hedge funds’ operations, liquidity, and strategies, while distinguishing between cash and derivative positions.