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Focus Report: Framework for analysing cost and risk for central government debt
Publication 29 September 2025
Focus Reports cover the Debt Office’s own analysis within our areas of expertise. Focus Report number 1 2025 presents a framework for analysing how the composition and term to maturity of the central government debt affect its cost and risk.
In the report, we use a model to simulate future interest rates and inflation starting at the end of 2024. On the basis of the simulations, we calculate cost and risk for different debt portfolios.
The findings, based on existing data, confirm the established conclusion that portfolios with longer maturities involve higher expected cost but also lower risk. The analysis also shows that inflation-linked bonds have both higher cost and risk than nominal bonds.
The authors of "Framework for analysing cost and risk for central government debt" are Petter Dahlström and Dong Zhang.