A Primer on Managing Sovereign Debt-Portfolio Risks
134 Pages Posted: 22 May 2018
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: Suggested Citation