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German Federal Government debt issuance outlook 2018
Fixed income capital market instruments
The majority of the envisaged annual issuance volume during 2018 will be attributable to Federal Treasury notes (“Schaetze”), Federal notes (“Bobls”) as well as Federal bonds (“Bunds”).
The German Federal Government plans to raise a total volume of € 52 billion via Schaetze, in twelve auctions (each tender with an issuing volume of between € 3 billion and € 5 billion). The Schatz initially issued in November 2017, maturing in December 2019, will be increased by another € 5 billion in January 2018. Moreover, four new issues are planned in 2018, with two reopenings of each issue. The new issue scheduled for November 2018 will only be increased once in 2018. The final outstanding volume of each Schatz is expected to be € 13 billion.
The German Federal Government plans to raise a total volume of € 35 billion via Bobls, in ten auctions (each tender with an issuing volume of between € 3 billion and € 4 billion). Two new series of Bobls maturing in April and October 2023, respectively, are scheduled for issuance. After their initial issuance in January and July 2018, respectively, four reopenings are planned for each new series. As at year-end 2018, the final volume outstanding of these new series will be € 17 billion and € 18 billion, respectively.
Ten-year Bunds will be placed to raise a volume of € 44 billion in 14 auctions (each tender with an issuing volume of between € 2 billion and € 5 billion). Two new issues of ten-year Bunds, maturing in February and August 2028, respectively, are scheduled for 2018. After their initial issuance in January and July 2018, respectively, six reopenings are planned for each issue. As at year-end 2018, the final volume outstanding of these two Bunds will be € 22 billion, respectively.
Bunds with a maturity of 30 years will be issued with an aggregate volume of € 16 billion in eleven auctions (each tender with an issuing volume of between € 1 billion and € 1.5 billion).The issuance volumes of the Bunds initially issued in 2017 (maturing in August 2048), in 2014 (maturing in August 2046) and in 2012 (maturing in July 2044) will be increased six, two and three times by € 9 billion, € 2.5 billion and € 4.5 billion, respectively, until year-end 2018.
Money market instruments
The issuance schedule 2018 provides for 15 auctions of Treasury discount paper ("Bubills") with a total volume of € 36 billion. It is intended to issue six 6-month Bubills with a volume of € 3 billion each and to increase them by € 2 billion each after one and three months. The new issuance approach will be introduced in a way, which would easily allow its continuation in the following years.
In comparison to previous years a further reduction of the total number of Bubills is planned for 2018. At the same time the total issuance volume of each new Bubill will be increased significantly. With the help of these measures, the issuer aims to strengthen the secondary market. Higher outstanding volumes are supposed to facilitate trading of larger positions and to further improve market liquidity.
Inflation-linked Federal securities
Inflation-linked securities will be offered on a monthly basis with a total volume between € 6 billion and € 10 billion throughout 2018, except in August and December.
The auction procedure of inflation-linked Federal securities is going to be adjusted slightly: From 2018 onwards, two securities can be offered per tender day. As usual, one week before each auction the securities to be reopened will be specified in a press release.
The introduction of multi-ISIN-auctions for inflation-linked securities improves the opportunity for investors to get access to a wider range of investment alternatives in this special market segment.
As a general rule applicable to all Federal securities, amounts and issue dates stated in the annual preview may change, depending on the financing requirements and liquidity situation of the German Federal Government and its special funds, and/or subject to conditions on the capital markets. However, the Federal Government plans to execute the planned issuance to the largest extent possible, in order to provide market participants with a reliable orientation for their investment decisions. The Federal Government reserves the right to issue other financing instruments, depending on market conditions and the general environment.
An update concerning planned issuance activities in the second quarter will be published during the third ten-day period of March 2018.
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