Day loan

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The day bond was a daily interest-bearing and available, gilt-edged investment product of the Federal Republic of Germany . The interest rate on the federal securities depended on the official interbank interest rate EONIA . The initial issue was on July 1, 2008. The issue of new shares in the day bond was discontinued on December 31, 2012 and canceled on December 31, 2019.

The day bond ( WKN 103007, ISIN DE0001030070) was administered by the finance agency responsible for federal debt management (Federal Republic of Germany - Finanzagentur GmbH) . As of June 30, 2019, a volume of around 852 million euros was still in circulation.

The day bond, like other federal securities , was one of the safest forms of investment because of the issuer's excellent credit rating . In addition to the advantages of a federal security, the overnight bond also offered the advantages of a call money account, as the money invested was available daily. The variable interest rate on the day bond was based on the daily average rate for overnight loans among banks, the EONIA. The daily crediting of the interest resulted in the greatest possible compound interest effect (calculation example see below). By coupling the interest rate to the EONIA rate, there was also a quick reaction to the money market and thus also to changes in the key interest rate by the ECB .

Conditions

The daily interest rate for the overnight bond was calculated from the EONIA reference value as follows:

  • If the reference value was 2.000% or less, the daily interest rate corresponded to the reference value minus 0.15 percentage points. The daily interest rate could not fall below 0%.
  • If the reference value was more than 2.000% and less than 6.000%, the daily interest rate corresponded to the reference value multiplied by the factor 0.925.
  • If the reference value was 6.000% or more, the daily interest rate corresponded to the reference value minus 0.45 percentage points.

The daily interest rate (= daily interest rate / 360) on the daily bond is reflected in its daily price. This grew every day by 1/360 of the respective daily interest rate and thus accumulates all interest credits accrued over the calendar year based on its initial value of 100% on January 1st.

The formula for calculating the daily price was:

Where t = current calendar day ("today"), t-1 = previous day ("yesterday") and daily interest rate = percentage expressed as a decimal number (1.00% = 0.01).

The minimum investment was 50 euros, the maximum purchase volume was 250,000 euros, the maximum sales volume was one million euros, each per person and banking day. The daily bond could be acquired free of charge, kept in the debt register and sold. The purchase was made by normal transfer from any bank account. The sale was possible via the Internet, by telephone or post and was always credited to the specified reference account (e.g. one's own current account).

The prerequisite for the purchase was the opening of a so-called individual debt register account, through which all other federal securities, such as B. Federal Treasury Bills, could be managed free of charge. This was managed like a securities account free of charge for private and institutional investors (e.g. non-profit associations).

Example of interest calculation:

If the EONIA was 4.0%, the daily interest rate was 4% · 0.925 = 3.700% pa and the daily interest rate 3.700% ÷ 360 = 0.010278%. However, due to the daily compound interest offset, the effective annual interest rate for the daily bond was .

Competitive products

While the interest rate on the day bond was directly linked to the development of the EONIA, an EONIA ETF tries to track the development of the EONIA through its investment policy. He can therefore not avoid underperformance compared to the EONIA and also cannot promise 100% security of the investment. The respective price risk and issuer risk therefore differed. The management fee of the EONIA ETF (e.g. 0.15% p. A.) Had to be compared with the discount on the interest rate of the daily bond on the EONIA reference value. In the case of an ETF, additional transaction costs are usually to be paid for stock exchange trading (buying and selling).

Due to the security of the investment and with the security of always receiving a market-driven interest rate through the direct link to the EONIA, the overnight bond also represented a competitive product to the overnight money offers of the banks and savings banks.

swell

  1. ↑ Federal securities page of the finance agency for private investors. 2018, accessed June 13, 2018 .
  2. ↑ Federal Ministry of Finance, VII C 2 - WK 2311/0: 001 of March 7, 2019, published in the electronic Federal Gazette
  3. ↑ Finance Agency press release: Federal government loan is discontinued. March 12, 2019, accessed August 13, 2019 . (PDF, 59 KB)
  4. ↑ Finance Agency: Individual list of outstanding federal securities and credit market funds. August 5, 2019, accessed August 13, 2019 . (PDF, 570 KB)
  5. ↑ Issue conditions for the federal day loan. June 6, 2008, accessed August 13, 2019 . (PDF, 71 KB)
  6. ↑ Finanzagentur customer magazine e-FORUM: Federal securities - June 2008. June 27, 2008, accessed on August 13, 2019 . (PDF, 506 KB)
  7. ↑ Handelsblatt: New offer - the federal government offers overnight money. May 28, 2008, accessed August 13, 2019 .

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