Government finance statistics: long-term debt securities – Products Eurostat news

Government financial accounts include transactions in financial assets and financial liabilities and stocks of financial assets and financial liabilities. In the first quarter of 2022, the market value of outstanding long-term debt securities in the euro area decreased by around €501 billion due to impairments in the financial markets. This is mainly due to the observed higher interest rates. This makes the debt securities issued in the past, when interest rates were lower, less attractive to investors, resulting in a drop in value. At the end of the first quarter of 2022, long-term debt securities accounted for around 71% of total euro area government liabilities.

This information comes from quarterly government finance data released today by Eurostat. The article presents a handful of insights from the more detailed Statistics Explained article.

Source data set: gov_10q_ggfa

The outstanding amount of liabilities changes either due to transactions (mainly due to net issuance but also due to accrued interest) or due to other economic flows (mainly price changes, also known as holding gains or losses). Because long-term debt securities are traded in the financial markets, the value of these instruments is constantly changing over time. At the end of the first quarter of 2022, the value of debt securities issued by euro area governments (by €501 billion) declined faster than the net issuance of new long-term debt securities (around €231 billion). This resulted in a €270 billion lower outstanding balance at the end of the quarter compared to the beginning of the quarter and a holding loss for creditors.

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Methodological Notes:

• In the European System of Accounts (ESA 2010), most assets and liabilities are valued at market value. This means that the stock of financial assets and financial liabilities fluctuates due to transactions, but also due to “other flows”, notably revaluations (gains and losses on nominal balances).
• Long-term debt securities are part of government gross debt as defined in the Maastricht definition of debt under the excessive deficit procedure. Therefore, long-term debt holdings data are also published at par, which excludes most price changes. Share at face value may vary significantly from share at market value.

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