Government debt levels concern investors. Robin Marshall, a FTSE sovereign bond expert, helps describe the landscape, and how it has developed, through the prism of the FTSE World Government Bond Index. DB pension schemes could be net buyers of bonds and the 60/40 portfolio may see a resurgence, he says.
US government shut-downs are possible again as the world’s largest economy reaches its ‘Debt Ceiling’ – the maximum amount of money the country can legally borrow. Shutdowns save money and avoid the need for further borrowing.
But it’s not just in the US where government debt levels are a concern for pension funds, credit rating agencies and other government bond holders. Credit ratings for bonds in the FTSE World Government Bond Index (WGBI) were, overall, “triple A” in 1984, when the index was launched. Now only 11% of its issuance is rated as triple A, while 57% is double A. The US has no triple A-rated…
