Other German Government securities

Promissory notes

Promissory notes are concluded at individually agreed condition with interested financial institutions.

Promissory notes ("Schuldscheine") are taken out in response to demand from financial institutions, insurance companies and other institutional investors if this form of borrowing offers a financing advantage for the Federal Government. However, borrowing via promissory notes has been modest in recent years, falling sharply from € 73 bn of overall borrowing between the start of the millennium and 2010 to around € 12 bn and since then decreased slightly to a level of less than € 7 bn at the end of 2019.

Promissory notes are eligible as collateral for Eurosystem credit operations (ECB eligible assets). In order to ensure that all outstanding promissory notes maintain their ECB eligibility after the guideline (EU) 2016/2298 of the ECB will take effect, the Federal Republic of Germany waived its rights to offset claims against the Deutsche Bundesbank in connection with the promissory notes. In addition, the contractual terms for any future promissory notes have been modified as well in order to make sure that the criteria for ECB eligibility are met.

Foreign currency bonds

If market conditions are favourable, the Federal Government can issue foreign currency bonds. To date, two USD bonds with maturities of three and five years have been issued as part of a syndicate process; the latter matured in 2012.

Thanks to favourable market conditions, the Federal Government was able to generate an attractive cost advantage over euro-denominated issues in the same maturity segment with its two foreign currency bonds issued in 2005 and 2009. Currency risks were excluded by hedges on the international capital market. The bonds were issued under German law and were specifically targeted at international investors wishing to diversify their USD exposure. The primary issuance was realized by a syndicate of international investment banks, and both bonds were admitted for trading on the Frankfurt Stock Exchange.

USD Federal Government bond due June 2010USD Federal Government bond due September 2012

Characteristics:

Redemption at par value
Annual interest payment in USD
Coupon of 3.875%
Par value/denomination USD 1.000
Original maturity: five years
Interest calculation: 30/360
Stock exchange-listed
Volume: USD 5 billion
Place of sale, custody and administration: Financial institutions

Characteristics:

Redemption at par value
Annual interest payment in USD
Coupon of 1.50 %
Par value/denomination USD 1.000
Original maturity: three years
Interest calculation: 30/360
Stock exchange-listed
Volume: USD 4 billion
Place of sale, custody and administration: Financial institutions

Repayment on 1 June 2010

Repayment on 21 September 2012