Inflation-linked securities

Profile

Maturity: 5-year (inflation-linked Bobl) or at least 10- or 30-year (inflation-linked Bund)

Income: fixed annual interest payment + inflation compensation

Redemption: at least par value + inflation compensation

Price risk: medium, from 10-year maturity high

Issuer risk: very low

Since entering the market segment of inflation-linked securities in 2006, the Federal Government, the investor base, financing flexibility and spectrum of securities offered have been expanded. Based on the previous success achieved in the form of diversification effects and interest cost savings, the Federal Government has successively established a real yield curve for Federal securities.
Compared to the nominal securities, the inflation-linked securities are issued and increased in smaller volumes. The reopenings are spread over several years until each security reaches a benchmark size of € 15 bn at least.

Inflation-linked German Government securities are now an established part of the Federal Government's financing strategy. Their share of total annual auction volumes amounts to around 3 % on average since 2006.

There are currently five inflation-linked Federal securities in circulation: four 10-year bonds and one 30-year bond. Today the 2012 issued inflation-linked bond maturing in 2023 constitutes the first point on the Bund real yield curve. The last point is represented by the 2015 issued inflation-linked bond maturing in 2046. With the new issue of the 0.1% inflation-linked Federal bond 2021 (2033) in February 2021, a new anchor point was set in the ten-year maturity range of the curve.

The five tradable securities currently have a total volume of € 65.6 bn. This corresponds to about 4.4 % of all German Government securities in circulation.

Inflation-linked Federal Securities (ILB) as a proportion of currently tradeable Government debt

Primary market

The liquidity of index-linked securities increases in parallel to the volume in circulation. The auctions generally take place on a monthly basis, with the exception of August and December.

The 2020 issuance volume of inflation-linked Federal securities reached € 5.5 bn, issued in ten auctions of which six were multi-ISIN auctions with two inflation-linked securities. In 2020, a bidding volume of around € 8.6 bn and an allotted volume of around € 4.0 bn resulted in an average bid-to-cover ratio of 2.1.

In 2021, there are ten auctions planned, too - and again an issuance volume between € 6 to 8 bn. This comprises a share of the total issuance volume across all Federal securities of just about 1.5 %. In addition to the planned reopenings in the course of the year, a new 10-year inflation-linked Federal bond was issued in February.
As usual, on Thursday of the preceding week of the auction date, the security (or in the case of a multi-ISIN-auction: securities) to be reopened will be specified in a press release by Deutsche Bundesbank.

In general, the issues in the inflation-linked securities segment are an integral part of the Federal Government's strategic issuance planning. So, the exact auction days are published already in the issuance outlook for the full calendar year. In principle, they continue to take place on a monthly basis, with the exception of August and December. As a rule, they take place on the first or second Tuesday of each month.

Inflation-linked Federal securities (ILB) as a proportion of total issuance volume in 2021

In contrast to the issuance volumes of nominal and money market securities which already had been fixed within the issuance calendar for the whole calendar year, the issuance amount of the inflation-linked securities is specified only right before issuance. So in this chart their share increases over the course of the year with each new issuance of an inflation-linked security whereby the shares of the other Federal securites decrease slightly. Similarly, the issuance volumes from syndicates and the increases of conventional twins of Green Federal securities into the Federal Government's own holdings are only included on the date of issuance. They lift the issuance volume - but not the auction volume.

Secondary market

The liquidity of inflation-linked securities has increased continually since inauguration in 2006. Since 2013, the total volume outstanding has always been above € 50 bn.
The trading volume of index-linked securities totalled around € 116 bn in 2019 (based on secondary market statistics from the Bund Issues Auction Group), € 9 bn below previous year's level. In both years, this corresponded to a share of around 3 % of the total trading volume of all Federal securities.

Thanks to the total volume of inflation-linked securities currently outstanding, the issuer can draw on a comfortably deep market, providing it with sufficient flexibility to support secondary market activities.

Currently tradeable inflation-linked Federal bonds and notes

Bond Maturity Coupon Outstanding Last Issuance ISIN
No security was found.
2021 (2033) Bund/€i 15.04.2033 0.10 % 2,200 € m 13.04.2021 DE0001030583
2015 (2046) Bund/€i 15.04.2046 0.10 % 10,200 € m 02.03.2021 DE0001030575
2015 (2026) Bund/€i 15.04.2026 0.10 % 16,800 € m 01.09.2020 DE0001030567
2014 (2030) Bund/€i 15.04.2030 0.50 % 19,900 € m 02.03.2021 DE0001030559
2012 (2023) Bund/€i 15.04.2023 0.10 % 16,500 € m 09.07.2019 DE0001030542

The terms of issue for inflation-linked Federal securities are available within the security master data after clicking on the corresponding ISIN.

Indexation coefficients of inflation-linked Federal bonds and notes

Daily reference index & indexation coefficients base year 2015 (XLS)
Daily reference index & indexation coefficients base year 2005 (XLS)