Public Debt Management
Exchange/Reverse Programme
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Repurchase of debt A debt exchange programme has been developed, since 2001, as part of the Republic of Portugal debt management strategy aiming at enhancing the liquidity of the debt market and as an instrument for managing the refinancing risk. In the Euro debt market, liquidity has emerged as one of the main factors explaining the spreads among issues of different sovereigns, the size of the issues and the trading conditions being the main determinants of liquidity. Since the start of stage three of EMU in 1999 the borrowing needs of the Republic of Portugal are being met mainly through the issuance of Treasury Bonds in the Euro market. Nevertheless, the Portuguese government debt still includes a certain number of loans that are not liquid due to the small sizes, coupons much higher than current market yields or the nature of the instrument or the market where they were issued. The debt exchange programme includes the early redemption or the buyback of loans and less liquid securities and their refinancing through the issuance of standard Treasury bonds (OT). When it was created in 2001, the main aim of the debt exchange programme was the acceleration of the exchange of old and less liquid debt for new OT issues. Since 2004, the programme is mainly aimed at minimising the refinancing risk resulting from the year’s redemptions. Different methods can be used for the execution of the buybacks:
The method to be used in each case depends on the nature of the loan, the targets for the amounts to buyback and the market conditions. Securities bought back are cancelled. |
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» Reverse and Exchange offer results in 2023
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