Abstract
This paper analyzes the Confederation’s debt management. The Confederation actively manages roll over and interest rate risk by increasing bond maturity with increasing marketable debt-to-GDP levels. It further engages in active but asymmetric, one-sided interest rate positioning; i.e., it uses mostly bonds to affect debt maturity and does so only when the interest rate environment is favorable to lock-in interest rates by issuing longer-term bonds. Debt management is mainly driven by marketable debt rather than total debt. Issuing behavior became more regular and demand-oriented during the early 1990s when marketable and total debt increased in tandem.
Highlights
This paper empirically analyzes the Confederation’s debt management based on new data vintages on marketable debt emissions and total outstanding debt from 1970 on
Similar to the USA, we find that the Swiss Federal Treasury increases marketable debt maturity with an increasing marketable debt-to-GDP ratio
Guggenheim et al Swiss Journal of Economics and Statistics (2019) 155:15 evidence provided over a period of 46 years with constant, increasing and decreasing debt-to-GDP levels suggests that the Treasury actively steers roll over and interest rate risk
Summary
This paper empirically analyzes the Confederation’s debt management based on new data vintages on marketable debt emissions and total outstanding debt from 1970 on. Guggenheim et al Swiss Journal of Economics and Statistics (2019) 155:15 evidence provided over a period of 46 years with constant, increasing and decreasing debt-to-GDP levels suggests that the Treasury actively steers roll over and interest rate risk. The share of non-marketable debt-to-GDP does not affect the issuing behavior neither in terms of outstanding bond maturity nor the share of short-term debt. This is consistent with the fact that nonmarketable debt primarily consists of public sector deposits. Closest to our paper is Garbade and Rutherford (2007), who analyze data on US federal debt, suggesting that the US Treasury actively manages its issuance and repurchases to achieve a target maturity of outstanding debt. Debt with a nominal value of CHF 1.22 trillion was issued between 1970 and 2016; CHF 0.99 trillion alone is due to the more
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