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

Due to the positive diversification effects and the interest cost savings realized over the past years, the federal government has successively established a yield curve of Federal securities. Compared with the nominal securities, the inflation-linked securities are issued in smaller volumes at the time of the initial issue and further increases. The reopenings are spread over several years until each security reaches a benchmark size of at least €15 bn.

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.

The five tradable securities currently have a total volume of € 73.2 bn.

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

Primary market

Inflation-linked securities are generally available with original maturities of around five (bonds) to around 30 years (notes). Their redemption and annual interest payments are linked to the development of the harmonized consumer price index (HICP) of the euro zone, excluding tobacco.

Issues in the inflation-linked Federal securities segment are generally an integral part of the Federal government's strategic issuance planning. The exact auction days are already published with the annual issuance outlook for the entire year. Ten auctions of inflation-indexed Federal securities are held each year - generally on the first or second Tuesday of each month, with the exception of August and December.

In some cases, the issues are conducted as multi-ISIN auctions, in which bids can be submitted for two securities at the same time. The security earmarked for a reopening on the issue date, or the securities earmarked in the case of a multi-ISIN auction, are named on the Thursday before the tender date in the announcement of the tender procedure by Bundesbank press release.

The annual issue volume in this segment amounted to €7.7 bn in 2021, which corresponded to a share of 1.6% of the annual issue volume of all German Federal securities. An issuance volume of between €6-8 bn is again planned for 2022.

Inflation-linked Federal securities (ILB) as a proportion of total issuance volume in 2022

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 inflation-linked securities totalled around € 163 bn in 2021 (based on secondary market statistics from the Bund Issues Auction Group), 31 % above previous year's level of € 114 bn. 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 % 5,800 € m 03.05.2022 DE0001030583
2015 (2046) Bund/€i 15.04.2046 0.10 % 11,700 € m 05.04.2022 DE0001030575
2015 (2026) Bund/€i 15.04.2026 0.10 % 17,800 € m 08.02.2022 DE0001030567
2014 (2030) Bund/€i 15.04.2030 0.50 % 22,150 € m 05.04.2022 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)