OECD governments are facing unprecedented challenges in the markets for government securities as a result of continued strong borrowing amid a highly uncertain environment with growing concerns about the pace of recovery, surging borrowing costs, sovereign risk and contagion pressures. The fourth OECD Sovereign Borrowing Outlook provides estimates of sovereign borrowing needs for 2011 and projections for 2012. In comparison with pre-crisis levels, gross borrowing by OECD governments is expected to remain at the elevated level of USD 10.4 trillion in 2011. In 2012, the borrowing needs are projected to reach USD 10.5 trillion, with a strong increase in longer-term redemptions. Against this backdrop net borrowing is estimated to fall to USD 2.1 trillion in 2012, while government debt ratios are expected to remain at high levels. Raising large volumes of funds at lowest cost, with acceptable roll-over risk, remains therefore a great challenge for a wide range of governments, with most OECD debt managers continuing to rebalance the profile of debt portfolios by issuing more long-term instruments and moderating bill issuance. Additional challenges for government (and corporate) issuers are the complications generated by the pressures of a rapid increase in sovereign risk, whereby “the market” suddenly perceives the debt of some sovereigns as “risky”, as well as euro area-induced contagion effects. Growing concerns among investors have resulted in the offloading of significant holdings of European debt.