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 the Federal Government’s entry into this market segment in 2006, the investor base, financing flexibility and spectrum of securities offered has been expanded. Based on the previous success achieved in the form of diversification effects and interest cost savings, one of the Federal Government's strategic goals is to maintain the achieved German Government security real yield curve.
Unlike the somewhat short and volume-heavy issuance tendencies for nominal bonds, inflation-linked bonds are initially placed in smaller volumes, followed by smaller increases across a number of months until each security reaches the benchmark figure of about € 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 4 % on average since 2006.
Inflation-linked German Government securities are now an established part of the Federal Government's financing strategy. Their share of total annual issuance volumes amounts to around 4 % on average since 2006.
There are currently four inflation-linked German Government securities in circulation: three 10-year bonds and one 30-year bond. Today the 2012 issued inflation-linked bond maturing in 2023 constitutes the first point on the German Government real yield curve. The last point is represented by the 2015 issued inflation-linked bond maturing in 2046.
Currently, the four current tradable securities have a total volume of € 60.45 bn. Since 2014 inflation-linked securities account for between 6 and 7 % of all German Government securities in circulation.
Inflation-linked Federal Securities (ILB) as a proportion of currently tradeable Government debt
The liquidity of index-linked securities is also increasing in parallel to the volume in circulation. The auctions generally take place on a monthly basis, with the exception of August and December.
2019 the issuance volume of inflation-linked Federal securities summed up to € 6.2 bn. In contrast to the previous year it was issued in ten instead of nine auctions. Additionally, three of these auctions were multi-ISIN auctions where two inflation-linked securities were offered within one tender. In 2019 a bidding volume of around € 8.2 bn and an allotted volume of around € 4.6 bn resulted in an average bid-to-cover ratio of 1.8.
For 2020, there are ten auction planned and an issuance volume within the range of € 6 to 8 bn which compares to share of the total auction volume across all Federal securities of about 2 %. There will be mainly reopenings of the existing inflation-linked bonds with maturities in April 2030 and 2046. Thereby the 2018 established multi-ISIN-auction procedure of inflation-linked Federal securities will be continued and offered in selected auctions. As usual, one week before 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.
|Annual volume in € bn||2019 |
|2020 quarterly |
|ILB auction volume||6.2||between 6 and 8||between 6 and 8|
Inflation-linked Federal securities (ILB) as a proportion of total issuance volume in 2020
The liquidity of inflation-linked securities has increased continually since they were first issued. Besides years with maturities in 2013, 2016, 2018 and 2020 the outstanding volume grew year by year.
The trading volume of indexed securities in 2019 totalled around € 116 bn (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 Government 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
|No security was found.|
|2015 (2046) Bund/€i||15.04.2046||0.10 %||9,300 € m||05.05.2020||DE0001030575|
|2015 (2026) Bund/€i||15.04.2026||0.10 %||16,550 € m||03.03.2020||DE0001030567|
|2014 (2030) Bund/€i||15.04.2030||0.50 %||18,100 € m||07.07.2020||DE0001030559|
|2012 (2023) Bund/€i||15.04.2023||0.10 %||16,500 € m||09.07.2019||DE0001030542|