As debt levels have been rising, a return to a new “normal”, still means elevated debt. As a result, debt issuance has increased and is concentrated at the long end of the sovereign yield. 10% of the funding requirement is financed by issuance of short-term loans and long-term loan issuance accounts for almost 90%. Average maturity of weekly bond auctions has thus increased to over 20 years in 2017.

This research considers the macroeconomic effect of debt maturity structure and asks whether the National Treasury can conduct contractionary monetary policy.

It does this by exploring:

1. The debt maturity structure
2. National Treasury’s bond switch auction programme
3. The cost of the switch auction
4. Macroeconomic effect of the switch auction/maturity structure