The German government has withdrawn billions of euros from bond issues this year, thanks to negative interest rates on its securities, according to a letter in the possession of Reuters, from the Deputy Minister of Finance of Germany, Florian Toncar, to a left-wing MP.
When federal securities were issued to finance the budget and emergency funds, “about 5.855 billion euros were raised,” according to Toncar’s letter in response to a question from Christian George, a far-left Linke party.
To address the effects of the pandemic, the federal government has borrowed a record 483 billion euros from markets this year, about a fifth more than in 2020, when it also issued record bonds.
The average yield of federal government securities issued this year is -0.56%, writes Toncar. Nevertheless, the auctions were covered 1.7 times.
“Despite the negative returns, German bonds are being sold like hot cakes,” said Goerke, a member of parliament for the opposition Linke. “The federal government could have sold even more bonds without any problems.”
For next year, the German debt management agency plans to issue bonds of 410 billion euros.
Having an ASE rating by all major rating agencies, German government bonds are sought after by investors, as repayments are considered very secure.
The bond market is also large, and massive takeovers by the ECB are boosting demand, pushing yields lower.
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Source From: Capital
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