Chapter 4: Government and Agency Debt

In this section

• Sovereign (National) Debt Instruments
  An in-depth look at how national governments issue and manage their sovereign bonds, exploring yields, credit considerations, and auction frameworks in global fixed-income markets.
• Non-Sovereign and Quasi-Government Bonds
  Explore municipal and quasi-government bond markets, including their unique issuance structures, revenue sources, credit analysis considerations, and implicit government support.
• Supranational and Agency Debt
  Explore the roles, structures, and credit considerations of supranational institutions and government agencies that issue debt to support broad societal and economic programs.
• Risk Considerations for Government Issuers
  Explore the various risks faced by government issuers, including credit, interest rate, refinancing, and political risks, plus practical tips and real-world examples.
• Inflation-Linked Bonds (TIPS and Linkers)
  Explore how inflation-linked bonds protect against rising prices, focusing on TIPS in the US and index-linked gilts in other markets, with detailed mechanisms, real-world examples, and practical strategies for CFA candidates.
• Central Bank Operations and Influence on Government Debt Markets
  Explore how central banks shape sovereign debt markets via interest rate policy, open market operations, and coordinated debt issuance strategies, including interventions such as quantitative easing and yield curve control.
• Debt Buybacks and Liability Management
  Explore the fundamentals, strategies, and real-world implications of government debt buybacks and liability management, highlighting how these tools can optimize debt profiles and manage costs.
• Budget Decisions and the Sovereign Debt Cycle
  Explore how government budget choices impact sovereign debt issuance, servicing, and redemption, along with debt sustainability and investor confidence.
• Sovereign Debt Crises and Restructuring
  A detailed exploration of how governments navigate sovereign debt crises, including causes, restructuring tools, negotiation processes, and lessons for portfolio management.
• Infrastructure Debt Financing Through Government-Sponsored Entities
  Explore how government-sponsored entities finance large-scale infrastructure projects, examining key structures, partnership models, and risk considerations that shape infrastructure debt markets.
• Government Contingent Liabilities and Off-Balance-Sheet Obligations
  Comprehensive exploration of potential and hidden government obligations, including pension underfunding, loan guarantees, and implicit public sector backing, crucial for thorough fixed-income analysis.
• Policy Coordination During Macroeconomic Stress Events
  Understanding how governments, central banks, and regulatory agencies collaborate to stabilize debt markets and maintain economic confidence during crises.
• Inflation Targeting and Constraints on Government Debt Issuance
  Explore how inflation targeting frameworks interact with government debt issuance, examining debt limits, fiscal dominance risks, and policy coordination challenges.
• Green Gilt Issuance and Climate-Focused Government Debt
  A comprehensive overview of Green Gilts and other climate-focused government debt instruments, their structure, benefits, and challenges, including real-world examples and best practices.
• Debt Sustainability Analysis and IMF/World Bank Lending Frameworks
  Explore how the IMF and World Bank assess a government’s debt-servicing capacity via Debt Sustainability Analysis, including key ratios, stress testing, concessional finance, and global case studies.
• Central Bank Digital Currencies and Government Debt Markets
  Explore how Central Bank Digital Currencies (CBDCs) reshape government debt issuance, market liquidity, and payment settlement, examining risks, real-world case studies, and best practices in a rapidly evolving digital finance landscape.