What do rising interest rates mean for government debt?

Link: https://lizfarmer.substack.com/p/rising-interest-rates-mean-for-governments?utm_source=post-email-title&publication_id=560793&post_id=135712385&isFreemail=false



The higher the interest rates, the more costly the financing of a new project is over the long run, thus increasing pressure on the municipal budget.

The example below compares the cost of a 20-year, $10 million debt issuance at different rates. “Coupons” refer to the interest rate that bondholders get back on their investment. “PV” stands for “present value,” or the face value of the bonds when they’re issued.

Author(s): Martin Feinstein

Publication Date: 18 Aug 2023

Publication Site: Long Story Short, Liz Farmer’s Substack