Federal bonds ("Bunds")

Profile

Maturity: 10 or 30 years

Income: fixed annual interest payment

Redemption: at par value

Price risk: medium (10-year) to high (30-year)

Liquidity risk: very low

Issuer risk: very low

10 and 30-year Bunds represent the long end of the German Government yield curve. At year-end 2016, they account for about 60 % of the Federal Government’s debt portfolio, with 10-year bonds alone accounting for about 45 %. They are therefore the most important source of funding for the Federal Government.

10-year and 30-year Bunds as a proportion of currently tradeable Government debt

Primary market

Ten-year and thirty-year Bunds represent the long end of the German Government yield curve. At year-end 2016 they account for about 60% of the Federal Government’s debt portfolio and therewith represent the most important financing instruments for the Bund. Ten-year Bunds comprise in 2017 29 % (2016: 25 %) and thirty-year Bunds around 6 % (2016 about 5 %) of the annual issuance volume (incl. inflation-indexed Government securities).

As in 2016, in January and July 2016 there will be two new 10-year Bunds. They will mature on February 15th and August 15th 2027. After an initial volume of € 5 bn both will be reopened  seven times until they reach a total outstanding volume of € 26 bn and € 25 bn each. In comparison to the prevouis year the 10-year Federal bonds issuance volume remains unchanged.

From January till July 2017 the 30-year Bund (maturing in August 2046) issued in February 2014 will be reopened four times. Furthermore the 30-year Bund (maturing in July 2044) issued for the first time in April 2012 will be reopened three times. At year-end these two bonds will reach outstanding volumes of € 23 bn as well as € 21 bn. In September there will be a new 30-year Bund issue of € 2 bn, followed by two reopenings till November.

The nine reopenings of € 1 bn and the new issuance of € 2 bn will lead to a total issuance volume of € 11 bn in 30-year bonds (2016’s issuance volume: € 9 bn).

Bunds as a proportion of total issuance volume in 2017

In contrast to the issuance volumes of nominal bonds which already had been fixed within the issuance calendar for the whole year, the issuance amount of the inflation-linked bonds is specified on a daily basis. Their share increases during the year with each new issuance of an inflation-linked bond (whereby the shares of the nominal bonds decrease slightly).

Secondary market

Both in the primary and secondary markets, Bunds are one of the most important sources of funding for the Federal Government. They account for about 30 % of the auction volume in 2017 and for more than half of trading volume.

There are almost 40 Bunds in circulation, accounting for up roughly half of the outstanding German Government securities in the secondary market. About a third thereof reaches a volume in circulation of at least € 20 bn. At year-end 2016, the total volume outstanding arrived at a figure of € 708 bn that corresponds to a share of slightly more than 60 % of the Federal debt.
According to Finance Agency data, in the secondary market for German Government securities 10-year Federal bonds accounted for a total share of over 50 % of trading volume of reporting member banks of the Bund Issues Auction Group. Since many years 10-year Bunds are the flagship product at the secondary level of the German Government bond market.

Stripping

Bunds can be stripped at the institution with which the securities are held in custody and their principals and coupons traded separately.

Additional investment opportunities have been available since the introduction of “Stripping” of 10- and 30-year Federal bonds in 1997. In case of a nominal interest rate higher than zero the principle and the interest coupons of these issues can be traded separately (from € 50,000; minimum denomination € 0.01). The separation of interest and principle is undertaken on behalf of the bond holder by the body carrying the safe custody account in question. It is also possible to reconstruct the original bond from the coupon strip and principal strip; however, only financial institutions may do this with their own bond holdings. Coupon strips with the same maturity are combined and traded under one single ISIN (security identification number). Strips from different types of bonds cannot be combined.

Since on September 13th, 2012, the Amendment to the German Federal Debt Administration Act (“Gesetz zur Änderung des Bundesschuldenwesengesetzes”) came into force and enabled the inclusion of collective action clauses (CACs) into the terms of newly issued German Government securities, already existing strips (not including CACs) and future strips (including CACs) are not fungible. So the Federal Government decided to establish new stripping dates. Since January 1st, 2013 new issuance terms and conditions came into effect: Federal bonds imply new standardised maturity dates on February 15th, May 15th and/or August 15th. (The former stripping dates were January 4th, July 4th and September 4th.)

Currently tradeable 10- and 30-year Federal bonds

Bond Maturity Coupon Outstanding last Auction ISIN
2017 (2048) Bund 15.08.2048 1.25 % 4,000 € m 22.11.2017 DE0001102432
2017 (2027) Bund 15.02.2027 0.25 % 26,000 € m 14.06.2017 DE0001102416
2017 (2027) Bund 15.08.2027 0.50 % 25,000 € m 06.12.2017 DE0001102424
2016 (2026) Bund 15.02.2026 0.50 % 26,000 € m 15.06.2016 DE0001102390
2016 (2026) Bund 15.08.2026 0.00 % 25,000 € m 23.11.2016 DE0001102408
2015 (2025) Bund 15.02.2025 0.50 % 23,000 € m 17.06.2015 DE0001102374
2015 (2025) Bund 15.08.2025 1.00 % 23,000 € m 25.11.2015 DE0001102382
2014 (2046) Bund 15.08.2046 2.50 % 23,000 € m 19.07.2017 DE0001102341
2014 (2024) Bund 15.02.2024 1.75 % 18,000 € m 16.04.2014 DE0001102333
2014 (2024) Bund 15.05.2024 1.50 % 18,000 € m 13.08.2014 DE0001102358
2014 (2024) Bund 15.08.2024 1.00 % 18,000 € m 26.11.2014 DE0001102366
2013 II (2023) Bund 15.05.2023 1.50 % 18,000 € m 14.08.2013 DE0001102317
2013 (2023) Bund 15.02.2023 1.50 % 18,000 € m 17.04.2013 DE0001102309
2013 (2023) Bund 15.08.2023 2.00 % 18,000 € m 27.11.2013 DE0001102325
2012 (2044) Bund 04.07.2044 2.50 % 22,000 € m 21.06.2017 DE0001135481
2012 (2022) Bund 04.07.2022 1.75 % 24,000 € m 08.08.2012 DE0001135473
2012 (2022) Bund 04.09.2022 1.50 % 18,000 € m 21.11.2012 DE0001135499
2011 (2022) Bund 04.01.2022 2.00 % 20,000 € m 29.02.2012 DE0001135465
2011 (2021) Bund 04.07.2021 3.25 % 19,000 € m 13.07.2011 DE0001135440
2011 (2021) Bund 04.09.2021 2.25 % 16,000 € m 19.10.2011 DE0001135457
2010 (2042) Bund 04.07.2042 3.25 % 15,000 € m 25.01.2012 DE0001135432
2010 (2021) Bund 04.01.2021 2.50 % 19,000 € m 23.03.2011 DE0001135424
2010 (2020) Bund 04.07.2020 3.00 % 22,000 € m 07.07.2010 DE0001135408
2010 (2020) Bund 04.09.2020 2.25 % 16,000 € m 13.10.2010 DE0001135416
2009 (2020) Bund 04.01.2020 3.25 % 22,000 € m 17.03.2010 DE0001135390
2009 (2019) Bund 04.07.2019 3.50 % 24,000 € m 16.09.2009 DE0001135382
2008 (2040) Bund 04.07.2040 4.75 % 16,000 € m 21.04.2010 DE0001135366
2008 (2019) Bund 04.01.2019 3.75 % 24,000 € m 18.03.2009 DE0001135374
2008 (2018) Bund 04.07.2018 4.25 % 21,000 € m 13.08.2008 DE0001135358
2007 (2039) Bund 04.07.2039 4.25 % 14,000 € m 23.01.2008 DE0001135325
2007 (2018) Bund 04.01.2018 4.00 % 20,000 € m 13.02.2008 DE0001135341
2005 (2037) Bund 04.01.2037 4.00 % 23,000 € m 25.07.2006 DE0001135275
2003 (2034) Bund 04.07.2034 4.75 % 20,000 € m 20.07.2004 DE0001135226
2000 (2031) Bund 04.01.2031 5.50 % 17,000 € m 16.07.2002 DE0001135176
2000 (2030) Bund 04.01.2030 6.25 % 9,250 € m 20.06.2005 DE0001135143
1998 II (2028) Bund 04.07.2028 4.75 % 11,250 € m 20.06.2005 DE0001135085
1998 (2028) Bund 04.01.2028 5.625 % 14,500 € m 20.06.2005 DE0001135069
1997 (2027) Bund 04.07.2027 6.50 % 11,250 € m 20.06.2005 DE0001135044
1994 (2024) Bund 04.01.2024 6.25 % 10,250 € m 09.02.1994 DE0001134922

The terms of issue for Federal bonds are available within the security master data after clicking on the corresponding ISIN.