Bund-Länder bond

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The Bund-Länder-Anleihe or Germany-Anleihe ( English Germany Bond or D-Bond ) is a public bond in Germany in which the Federal Government, together with a number of federal states, takes on debts on the capital market . The funds are divided among the federal and state governments; they are proportionally liable for interest and repayment in the amount of their respective share of the issue volume.

General

A joint appearance as an issuer (federal and state) is a fundamentally new concept in the public financing system in Germany. Up to now, the federal authorities (overall state: federal securities ) as well as the individual federal states (member states: state bonds ) have each represented their own purposes with their own creditworthiness and the resulting individual interest rates on the capital market. The so-called “ country jumbos ” are an exception . Due to the proportional liability of the debtors, federal-state bonds are not federal securities and form a hybrid between government bond and state bond .

The first Bund-Länder bond had a term of seven years (until July 15, 2020) and was issued on June 26, 2013 with a volume of three billion euros.

Issuer

Ten of the 16 federal states and the federal government are the issuers with the following shares in the issue volume:

Issuer proportion of
North Rhine-Westphalia 20.00%
Germany 13.50%
Berlin 13.50%
Free Hanseatic City of Bremen 13.50%
Schleswig-Holstein 8.00%
Brandenburg 6.75%
Rhineland-Palatinate 6.75%
Saarland 6.75%
Hamburg 5.25%
Mecklenburg-Western Pomerania 3.25%
Saxony-Anhalt 2.75%

The - mostly comparatively financially stronger - federal states of Bavaria , Baden-Württemberg , Hesse , Lower Saxony , Saxony and Thuringia are not involved. As reported by the Bloomberg LP news agency, when asked by the finance ministries of these countries, “they are not interested in such a joint loan”. This was emphasized by Lower Saxony's Finance Minister Hartmut Möllring : “On the one hand, we believe that the financing terms are more favorable if we issue a bond on our own, and on the other hand, we can then also determine the terms ourselves, when we go on the market with what term and under what conditions . "

Bond winners and losers

The consortium banks announced that the demand for the three billion euro federal-state bond was greater than the supply, which basically gave the possibility of lowering the issue yield of 1.663 percent even further. The NordLB analyst Fabian Gerlich said: "The premiere was successfully go on the stage. Therefore, investors were lured with a premium. [Nevertheless, the following applies:] NRW should have the most interest savings. The market yield for a seven-year bond issued by the state is around 1.7 percent. ”The federal government is one of the losers in the bond issue, as the interest rates for this German bond are around 0.5% higher than for a comparable federal bond with a seven-year term .

Issuing modalities

Marketplace

The Germany bond was placed on the market with the help of a banking consortium , coordinated by the Federal Finance Agency . It includes Barclays, Commerzbank, Deutsche Bank, DZ Bank and HSBC.

liability

The issuers are jointly and severally liable for the interest and redemption payments in fixed, predetermined shares according to their respective issue volume. In particular, the Federal Minister of Finance, Wolfgang Schäuble , refused to accept joint and several liability because, in addition to constitutional concerns, the design of the Germany bonds could be seen as a blueprint for the controversially discussed euro bonds .

Credit rating

The rating agency Fitch gives the bond an “AAA” rating . "The rating reflects [...] the strong support mechanism, which includes all parts of Germany, as well as the extensive liquidity facilities." Thus, there is only a very low risk of default.

Purpose of issue

The issue of a Germany bond was already agreed between the federal government and the federal states as part of the negotiations on the 2012 Fiscal Compact . The improved financing conditions should prove to be advantageous for the participating federal states, which result thanks to an internationally broadened investor base and the significantly higher issue volume compared to the state jumbos and thus better tradability of the bond.

opportunities

The 16 German federal states have a financing requirement of 90 billion euros in 2013 alone, so that even a very small drop in interest rates could save millions in the two to three-digit range. Higher financing costs of the stronger countries or the preferential treatment of money for the weaker countries could be taken into account in the national financial equalization . In Germany's national accounts, there would thus be a “ remarkably positive effect. [...] If the paper is established, there could be clear advantages for the countries involved, ”experts say.

Analysts give the new bond a good chance. It will be a success , said NordLB expert Fabian Gerlich to Reuters . However, in order to establish the Deutschland-Bond permanently on the market, several issues have to take place per year. The construction of a liquid curve - [ie] several maturity ranges with five, seven and ten years - is also necessary for this. The higher the liquidity of a bond, the easier it is for investors to sell it again if necessary. They are also prepared to cut back on the return.

Web links

Individual evidence

  1. ↑ John Geddie: Investors see through Germany's D-Bond marketing game . English. www.reuters.com, last accessed on June 16, 2013.
  2. ↑ Handelsblatt: Successful premiere for Germany Bond
  3. ↑ a b c Official website of the Bund-Länder-Anleihe ( Memento from May 4, 2014 in the Internet Archive ). Online at www.deutsche-finanzagentur.de, last accessed on June 27, 2013.
  4. ↑ Joint bond without six federal states - Germany bonds with little Germany . Online at www.sueddeutsche.de, last accessed on June 15, 2013.
  5. ↑ Successful premiere for Deutschland-Bond . Online at www.reuters.com, last accessed June 30, 2013.
  6. ↑ Markus Frühauf: Expensive federal-state bond. In: FAZ.net . June 26, 2013, accessed October 13, 2018 .
  7. ↑ In the interview. Tammo Diemer, German Finance Agency - First Germany bond on the march . Online at www.boersen-zeitung.de, last accessed on June 15, 2013.
  8. ↑ The Germany Bond is here! . Online at www.format.at, last accessed on June 23, 2013.
  9. ↑ Bund-Länder-Anleihe receives AAA (EXP) rating from Fitch Ratings . In: Die Welt , last accessed on June 23, 2013.
  10. ↑ Handelsblatt: Successful premiere for Germany Bond
  11. ↑ Merkel advocates Germany bonds for the first time . Online at www.de.reuters.com, last accessed on June 15, 2013.
  12. ↑ Press release of the Federal Ministry of Finance ( memento of July 3, 2012 in the Internet Archive ) of June 25, 2012. Online at www.bundesfinanzministerium.de, last accessed on July 1, 2013.
  13. ↑ Michael Braun: Debt together . Report in Deutschlandfunk - Wirtschaft und Gesellschaft from June 26, 2013. Online at www.dradio.de, last accessed on July 1, 2013.
  14. ↑ Deutschland-Bond - Eleven federal states are planning a joint bond with the federal government . Online at www.handelsblatt.com, last accessed on June 15, 2013.