User:LEVOLARD/German Government Securities
Federal securities are the securities issued by the Federal Government and its special funds, also referred to as public bonds or government bonds issued by the Federal Government.
General
[edit]They are used to finance deficits in the federal budget or specific projects and are managed by the Federal Republic of Germany - Finance Agency GmbH. As debt manager, the Finance Agency provides all services related to the issuance of the German Government securities with technical support from the Deutsche Bundesbank.[1]
Types of German Government Securities
[edit]The Federal Republic issues the following securities through the Finance Agency:
- Federal bonds (Bunds) with 7, 10, 15 or 30-year maturities
- Federal notes (Bobls) with 5-year maturities
- Federal treasury bills (Treasures) with 2-year maturities
- Non-interest-bearing Treasury bills (Bubills) with 6 or 12 months maturity Inflation-indexed
- German Government securities (ILB)
- inflation-indexed bonds issued by the federal government with 5-year maturities
- inflation-indexed bonds issued by the federal government with 10, 15 or 30-year maturities.
The issuance of the following (retail) securities was discontinued as of December 31, 2012:
- Federal treasury bonds (Bonds with rising graduated interest rates)
- Type A (term 6 years - interest paid annually in arrears)
- Type B (term 7 years - interest accumulated (compound interest effect) and paid out at the end of the term).
- Financing treasures with 1 or 2 years maturity
- Overnight bond (unlimited term, similar to an overnight deposit account in the form of an accumulating federal bond)
In 2019, the last two remaining private investor securities, the "Bundesschatzbrief" and the "Tagesanleihe", were redeemed.
The first Green Federal Bond was launched on the primary market, on September 2, 2020, an earmarked bond for projects in transport, international cooperation, research, innovation and information, energy, industry, and agriculture and forestry. Despite a negative yield the bond, which was launched with a trading volume 6.5 billion euros, was five times oversubscribed.[2]
Runtime
[edit]
The maturity of German Government securities varies from short-term (non-interest-bearing treasury note or Federal Treasury note) to long-term (Federal Bonds). Since new German Government securities are constantly being issued and the maturities of previously issued securities are continuously decreasing, around 60 different German Government securities with maturities ranging from a few months to 30 years can be traded on a permanent basis.
Emission method
[edit]German Government securities are also divided into one-off issues and tap issues according to their issuing procedure. Until the discontinuation of business with private investors at the end of 2012, Federal Treasury bills, financing treasury bills and overnight bonds were issued as tap issues. They could be acquired on a permanent basis by investors, whose demand determined the scope or volume of an issue. The German Government securities that can still be purchased today are all issued as one-off issues. Federal bonds, Federal notes, Federal Treasury notes, non-interest-bearing Federal Treasury notes and inflation-indexed Federal securities are only offered for purchase at specific times. The targeted issue volume is determined by the issuer in advance. The issuance takes place in an auction in which registered banks of the "Bidder Group for Federal Issues" can participate. These then resell the majority of the bonds to other investors.[3] Due to the federal government's increased borrowing needs and thus issuance volume to address the COVID-19 pandemic, several issues will be conducted in the bank syndicate in 2020. In the past, this issuance method has mostly been chosen to issue new federal securities, such as in 2015 for the first issuance of a 30-year inflation-indexed federal bond.[4]
Stock exchange trading
[edit]With the exception of Treasury discount paper and tap issues, all German Government securities are traded on the German stock exchanges and on electronic trading platforms. Private investors can buy or sell them on each trading day via their bank. Market management for German Government securities operates the Deutsche Bundesbank by ensuring that trading takes place at fair prices.[5] The Finance Agency also participates in trading in German Government securities by supporting the Bundesbank as well as other market makers on electronic trading platforms and in OTC (over the counter) trading in German Government securities.[6]
Technically, German Government securities become tradable as uncertificated securities through entry in the Federal Debt Register, whereby the Investor receives a co-ownership share in the securities portfolio in accordance with § 6 Abs. 1 of the German Securities Deposit Act (DepG).
Security
[edit]The Federal Republic of Germany is considered one of the world's most secure debtors. The securities issued by the Federal Government are secured by German tax revenues. Germany is regularly awarded the highest possible credit rating of AAA by international rating agencies. In addition, investments in German Government securities are gilt-edged within the meaning of Section 1807 of the German Civil Code.
Use of the credits
[edit]In addition to the federal budget, the loans taken out through federal securities benefit the following special federal funds of the federal government on a pro rata basis:[7]
- Financial Market Stabilization Fund (has its own borrowing authority)
- Investment and Redemption Fund (has its own borrowing authority)
- Economic Stabilization Fund (has its own borrowing authority)[8]
- Restructuring Fund for Credit Institutions (has its own borrowing authority)
- Provision for final payments on inflation-indexed federal securities
- Energy and Climate Fund
- Development aid fund
- Municipal investment support fund
- Childcare expansion and childcare financing
- Digital infrastructure
Web links
[edit]- Website of the Federal Republic of Germany - Finance Agency GmbH.
- Website of the Federal Ministry of Finance
- Website of "Deutsche Bundesbank"
Individual references
[edit]- ^ "Die Bundesbank als Hausbank des Bundes". www.bundesbank.de (in German). Retrieved 2022-11-06.
- ^ tagesschau.de. "Bundesanleihe". tagesschau.de (in German). Retrieved 2022-11-06.
- ^ Finanzagentur, Deutsche. "Primärmarkt". Deutsche Finanzagentur (in German). Retrieved 2022-11-06.
- ^ "Bundesanleihen: Deutschland platziert milliardenschwere 30-jährige Bundesanleihe". www.handelsblatt.com (in German). Retrieved 2022-11-06.
- ^ "Schuldenmanagement des Bundes - Bundesfinanzministerium - Themen". Bundesministerium der Finanzen (in German). Retrieved 2022-11-06.
- ^ Finanzagentur, Deutsche. "Aktivitäten". Deutsche Finanzagentur (in German). Retrieved 2022-11-06.
- ^ Finanzagentur, Deutsche. "Portfoliomanagement". Deutsche Finanzagentur (in German). Retrieved 2022-11-06.
- ^ Finanzagentur, Deutsche. "Wirtschaftsstabilisierungsfonds". Deutsche Finanzagentur (in German). Retrieved 2022-11-06.
[[Category:Government bonds]] [[Category:Funding]] [[Category:German Government Securities]]