A Primer on Managing Sovereign Debt-Portfolio Risks

134 Pages Posted: 22 May 2018

See all articles by Thordur Jonasson

Thordur Jonasson

International Monetary Fund (IMF)

Michael G. Papaioannou

International Monetary Fund (IMF)

Date Written: April 2018

Abstract

This paper provides an overview of sovereign debt portfolio risks and discusses various liability management operations (LMOs) and instruments used by public debt managers to mitigate these risks. Debt management strategies analyzed in the context of helping reach debt portfolio targets and attain desired portfolio structures. Also, the paper outlines how LMOs could be integrated into a debt management strategy and serve as policy tools to reduce potential debt portfolio vulnerabilities. Further, the paper presents operational issues faced by debt managers, including the need to develop a risk management framework, interactions of debt management with fiscal policy, monetary policy, and financial stability, as well as efficient government bond markets.

Keywords: Public debt management, Financial risk, Foreign Exchange Hedging, Government Securities Markets, General, Portfolio Choice

JEL Classification: H63, G10, G11, G12, G15, G18

Suggested Citation

Jonasson, Thordur and Papaioannou, Michael G., A Primer on Managing Sovereign Debt-Portfolio Risks (April 2018). IMF Working Paper No. 18/74, Available at SSRN: https://ssrn.com/abstract=3182494

Thordur Jonasson (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Michael G. Papaioannou

International Monetary Fund (IMF) ( email )

700 19th Street NW
10-115
Washington, DC 20431
United States
001-202-623-7799 (Phone)
001-202-623-7018 (Fax)

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