Figure: standard issuance procedure for German Government paper - large size

The German Federal Government usually places single issues by auction. Only members of the “Auction Group Bund Issues” can participate directly in these auctions (see the section entitled Auction Group Bund Issues).

The auctions are carried out via the Deutsche Bundesbank Bund Bidding System (BBS). The bids for Federal bonds (Bunds), five-year Federal notes (Bobls) and Federal Treasury notes (Schaetze) must be for a nominal amount of at least € 1 million, or a full multiple thereof, and should state the price, expressed as a percentage of the nominal amount, at which the bidders are prepared to buy the securities offered. In principle, it is possible to enter several bids at different prices and/or to make non-competitive bids. The prices bid must be for  a full 0.01 percentage point for Bunds and Bobls and for a full 0.005 percentage point for Schaetze.
Bids for  Treasury discount paper (Bubills) must also be for at least € 1 million of nominal value, or a full multiple thereof, and should state the yield at which the bidders are prepared to buy the securities. The yield bids must be for a full 0.0005 percentage point. It is possible to make several competitive and/or non-competitive bids.
The Bund uses a multiple price auction procedure. In other words,  bids for Bunds, Bobls and Schaetze accepted by the German Federal Government are allocated at the price quoted in the respective bid and are not settled at a uniform price. Bids priced above the lowest accepted price are allotted in full, while bids priced below the lowest accepted price receive no allotment. Non-competitive bids are allotted at the weighted average price of the accepted price bids. The Federal Government reserves the right to re-allot the bids at the lowest accepted price as well as the non competitive bids, e.g. to allot them only at a certain percentage rate. The same procedure is applied on a yield basis for Bubills.
The details of the auction procedure for the issuance of Federal Bonds, Five-Year Federal Notes, Federal Treasury Notes and Treasury Discount Paper of the German Government are outlined in the Bundesbank’s website (Auction procedure - external Link).

The German Federal Government auctions for nominal-yield Bunds, Bobls and Schaetze take place on Wednesdays between 8.00 a.m. and 11.30 a.m, while money market instruments will still be auctioned on Mondays. Since 2013 the members of the Bund Auction Group can submit their bids at any auction electronically to the German Federal Government till 11.30 a.m. (CET) via the BBS platform. The German Finance Agency decides on the allotments directly after the end of the bidding period and informs the bidders via the BBS platform. The figure above shows the steps in the standard issuance procedure for German Government paper, starting with the announcement of the issuance calendar and ending with the settlement of the auction allotment on the value date.

The issuing procedure for inflation-linked German Government securities changed in January 2013. Auctions will be held on Tuesdays at 11.30 a.m. In contrast to the standard procedure, rather than being fixed at six working days in advance, the period for the announcement of the auction is flexible. The invitation to submit bids is then sent out one working day before the auction. In the case of new issues the coupon has  usually already been determined by the time of the auction’s announcement.

At the auctions the Federal Government retains a certain nominal amount for secondary market operations, which can be sold successively in the market after the auction (see the section entitled Secondary Market Activities).