by Verità&Affari editorial team
The total amount of Government bonds and corporate bonds issued around the world have reached the “monstrous” threshold of 100 trillion dollarsa value similar tothe GDP of the entire planet. This is what emerges from the first annual OECD report on debt (Global Debt Report 2024) which examines this key segment of the market, in the context of increased interest rates and therefore with the challenges they present for states and issuing companies.
“After decades of expansion, a rapid change in the macro-financial context now presents these markets with the most challenging test in a generation,” says the Paris-based body. “The protracted period of historically low rates, which allowed for widespread growth in global debt and the expansion of most at-risk market segments, has now come to an end. High policy rates, quantitative tightening and heightened geopolitical tensions are having significant impacts.” And in the meantime “the refinancing needs are considerable – continues the OECD -. Furthermore, today’s bond markets are also characterized by a growing universe of more price-sensitive investors.”
In this context, Italy is among the countries that will record among the highest levels of bond maturity compared to GDP between now and 2026: “in five OECD states – states the study – fixed rate securities for over 20% of the GDP will accrue in this period, including Japan (52%), Italy (33%), the United States (27%), Spain (27%) and France (20%).
These countries face increased refinancing risks if high interest rates persist for much of this period.” According to the OECD, it is necessary to ensure that debts that were manageable in a context of lower interest rates, and in which central banks were buyers “do not become unsustainable in this new reality. At the same time, refinancing needs are higher than ever: demographic changes, slowing economic growth and decarbonisation will require tens of trillions of dollars.” “Managing all of this effectively could become the key challenge you will face cope with the global economy”.
Italy’s strategy of offering government bonds directly to consumers and increasing the share of retail investors in the total public debt subscribers is an “interesting” innovation, which according to the OECD can also reduce sustainability risks. Carmine di Noia, director for financial and corporate affairs of the OECD, explained this in response to a question during the press conference to present the first annual report on bonds published by the Parisian body. “We dedicated part of the study to the sustainability of public debts. There are different characteristics and different markets and in terms of emissions and Italy is an interesting case – he said -. We have seen for many years that the Treasury has issued not only directly to retail, but also using online microstructures. I think this is an interesting evolution.” Bonds, “bonds are a good class of securities” and this strategy “also helps to match supply and demand. I think it’s an appropriate way to diversify demand, in terms of reaching consumers,” as with BTP Italia. “It’s an interesting evolution, I don’t think it’s adding risks – concluded Di Noia – but I think exactly the opposite”