Wider spreads and volatility have been named as the biggest concerns for borrowers in the year ahead, according to OMFIF’s 2025 Public sector debt outlook survey.
The annual survey of global sovereign, supranational and agency borrowers provides a detailed outlook on funding programmes, sustainable issuance, primary dealers, distribution of bonds, role of non-banks and more. This year’s survey was completed by 32 SSAs, comprising some of the biggest and most prestigious issuers in the market.
The expectation of wider spreads was highlighted as the biggest funding concern by borrowers, with 85% of respondents selecting this as one of the top three worries (Figure 1). Just over 40% selected wider spreads as their single biggest funding concern. Meanwhile, 68% highlighted volatile markets as one of their top three worries.
Figure 1. Wider spreads is the biggest concern for borrowers this year
What are your biggest funding concerns in 2025? Share of respondents, %
Source: OMFIF Public sector debt outlook survey 2025
Fears of wider spreads and volatility can be attributed to global macroeconomic risks, with geopolitical instability, the impact of tariffs and trade wars, and poor economic growth listed as key macro concerns by the survey’s respondents.
Despite these risks, borrowers do not on the whole expect a substantial difference in demand and new issue premiums compared to 2024. The majority of respondents (47%) expects subscription ratios to remain at two to three times, in line with last year. Meanwhile, 69% expect new issue premiums to stay the same as 2024. However, that is not to say that some borrowers will not see new issue premiums rise in 2025 due to market uncertainty. ‘Expect new issue premiums to rise due to inflation fears and potential market volatility,’ said one borrower. Another borrower said new issue premiums ‘will not be consistent across issuers – some will have to offer more’.
The survey also analysed borrowers’ views on primary dealers, including what they value most from their banks. The two most popular responses for this were distribution to investors and secondary market liquidity, with 94% selecting the former as one of the three most valued aspects of primary dealers. Meanwhile, 60% selected this as the single most valued aspect.
In terms of the expected composition of the investor base in 2025, borrowers expect a net increase across all investor types compared to 2024, with a particular rise in asset managers (31%) and central banks and official institutions (25%). However, 22% also said they expect the composition of central banks and official institutions to decrease. By geographical distribution, borrowers expect an increase from Europe (28%) with a slight decrease from Asia Pacific (-13%) and North America (-12%).
Borrowers also outlined their views on the role of non-banks, with 35% expecting non-banks to play a more active role in both primary and secondary markets in 2025, up from 25% in 2024. However, the same number of respondents said they expect non-banks to not play an active role in primary or secondary markets, highlighting a clear divide (Figure 2). ‘Hedge funds help banks with market-making activity,’ said one borrower. ‘They have a growing role at auctions and also in providing liquidity in the secondary market.’
Figure 2. Borrowers divided over role of non-banks
Do you see non-banks playing a more active role in primary and secondary markets in 2025? Share of respondents, %
Source: OMFIF Public sector debt outlook survey 2024-25
Other aspects of the survey looked at sustainable issuance and digital bonds. The vast majority of respondents (97%) expects the greenium to remain either non-existent or minimal, with 45% choosing the former. While 34% of respondents said they have no plans to issue a digital bond, 53% said that even though they are not currently working on this, they are watching market developments.
OMFIF Sovereign Debt Institute’s 2025 Public sector debt outlook survey was completed by 32 global SSA borrowers between February and March 2025. The results were presented at the Public sector debt summit on 18 March.
Burhan Khadbai is Head of Content, Sovereign Debt Institute at OMFIF.
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