Global sovereign debt issuance is heading for another record year. The OECD forecasts that governments will raise around $17 trillion in 2025, while the Association for Financial Markets in Europe (AFME) reports that €1.08 trillion was issued in Europe in the second quarter alone — the fourth-highest quarterly level since 2020.
Despite record new supply, investor appetite remains strong. As a case-in point, bid-cover ratios for European sovereign debt auctions are at their highest since records began in 2010, showing the depth of demand for government debt. However, beyond these headline figures lies a subtler question about how all of this debt moves through the global financial system. At a time when liquidity seems ample, the stress points are shifting from repo market capacity to market access.
Who can reach repo funding, how easily, and through what channels?
Access to liquidity, not just its presence
Repo markets are the plumbing behind sovereign debt distribution. They ensure bonds can be financed, hedged, and reused as collateral. These are functions that depend on continuous access to secured funding and central bank facilities undoubtedly play a pivotal stabilising role.
In the UK, the Bank of England’s Short-Term Repo (STR) and Indexed Long-Term Repo (ILTR) operations have become core to managing balance-sheet pressure and liquidity stress. Access to these windows is now far more routine in an environment where Quantitative Tightening (QT) has reduced the amount of excess liquidity in the system. Across major jurisdictions, usage patterns differ, but what matters most is that firms can connect to these tools in a straightforward and operationally efficient way. In the U.S. and euro area for instance, the structure and frequency of facility use vary, influenced by how each framework is designed and integrated into firms’ day-to-day operations.
Even where access exists, technological integration and operational readiness determine how effectively participants can use these facilities, particularly around year-end, when balance-sheet availability tightens. Our data shows clear seasonal patterns. In March, we witnessed a record $407 billion in US repo volume, the second-highest daily total on record, while European average daily notional volumes (ADNV) reached €350 billion.
Market infrastructure and technology
Participation in cash market infrastructure, be it central limit order books such as BrokerTec, or request-for-quote platforms such as BrokerTec Quote, or via clearing, improves access and choice. As the US repo market readies itself for mandatory clearing for certain repo transactions, the potential for increased use of clearing in the U.K. and Europe continues to remain an active discussion point. The Bank of England’s recent discussion paper on clearing access and potential haircut frameworks reflects how this topic is evolving.
Today in the UK and Europe, barriers remain to the participation of investment managers in repo market infrastructure. As a consequence, timing and certainty of access differs between dealer-to-dealer and dealer-to-client flows. Reducing that gap is key to achieving a more resilient market. Ensuring that access models are simple to connect to and available to a broad range of counterparties will be essential as activity grows.
Technology will be central to that journey. As more repo trading becomes electronic, the market is asking what comes next. How can new connectivity and access models deliver broader, faster, and fairer access to liquidity? The direction of travel points toward lowering barriers and enabling participants of all sizes to reach liquidity on equal terms.
Collateral, credit and balance-sheet optimisation
Record issuance has also intensified focus on the quality and eligibility of collateral. The recent downgrade of French debt is a reminder that rating changes can influence repo haircuts and collateral frameworks, though in practice these differ widely across institutions. There is no single haircut model, they simply reflect each bank’s balance-sheet structure and risk appetite.
The result is a shift in emphasis. Banks are now optimising balance sheets rather than just collateral. They’re in the middle of weighing up regulatory capital and levy impacts when deploying liquidity. Investment managers, in turn, are selecting counterparties based on balance-sheet impact.
A market defined by access
The repo market is increasingly defined by access to clearing, central-bank facilities, technology, and ultimately to liquidity itself. Electronification has addressed many of the operational inefficiencies that once constrained repo trading. However, the next challenge is to ensure that this access is universal and frictionless, enabling collateral to move freely across the system even as sovereign supply continues to rise.
Broad, uncomplicated access, rather than jurisdictional differences, will determine how well the market absorbs continued record issuance. Ultimately, in a world awash with government debt, the question is no longer whether liquidity exists — it’s whether everyone who needs it can reach it fast enough to keep the system flowing.