Primary market

The Federal Government covers more than 90 percent of its funding needs via one-off issues on the primary market. The bonds are generally issued as part of a tender/auction process in which financial institutions are able to participate once they are accepted into the Bund Issues Auction Group.

The majority of the Federal Government's funding needs are covered by one-off issues via auction process. The exact issuance plan is published in advance for the entire calendar year.

Special funding tools, such as the US-dollar bonds issued in 2005 and 2009 or the Bund-Laender-Anleihe issued in 2013, are placed by the Federal Government on the primary market via a banking consortium.

The one-off issues planned by the Federal Government are announced at the end of each year in its annual preview for the following calendar year. Since 2013, this annual preview has also included a detailed issuance calendar for the forthcoming year complete with exact auction dates so as to enable investors to plan their activities with even greater certainty.

To a far lesser extent, the Federal Government also obtains funding from promissory notes concluded individually with financial institutions on a sporadic basis as well as German Government securities holdings sold on the secondary market following an auction.

Auction volume (€ billion) of German Government securities

The share of money market securities in the auction volume, which had been increased noticeably in 2009, was reduced almost continuously in the following years and reached a minimum by the discontinuation of the 12-month Bubills in 2017. With the introduction of a new issuance pattern and thus increases in the 6-month Bubills, since 2018 the share of money market securities has recovered to the higher long-term average level of around a quarter of the total auction volume. December 2019's annual forecast for 2020 had already envisaged an expansion of money market issues by almost 50 % to EUR 62 bn.

In response to the current significantly increased financing requirements, the planned adjustments in the second and third quarter will lead to a quadruplication of money market issues to € 175 bn in 2020. Compared to the initial annual preview, this is a plus of € 132 bn in money market borrowing. In the course of the second half of the year, issuance will increasingly shift away from the 6-month Bubills to the 12-month Bubills that have been newly issued again since April. Thus, from the third quarter onwards, no new 6-month Bubills will be issued, already outstanding will only have reopenings after 1 and 3 months. Instead, the monthly new issues of 12-Months-Bubills since the second quarter will open up investment opportunities in six remaining maturities: twelve, eleven, nine, six, five and three months.

The annual auction volume of capital market securities will increase by € 47 bn to € 200 bn, compared with the 2020 forecast due to the adjustments in the second and third quarter. The additional volume will be divided between Schatz (€ +2 bn), Bobl (€ +3 bn) and Bund10 (€ +8 bn). Furthermore, the new maturities of Bunds introduced in the second quarter, will have reopenings of € 12 bn (7-year Federal bonds) and € 10.5 bn (15-year Federal bonds) during the third quarter. The charts of the 2020 auction volume don’t include the two syndicates of Bund 15Y (€7.5 bn) and of Bund 30Y (€ 6 bn).  Adding these volumes will lift the issuance volume of Bund 15Y to € 20.5 bn and of Bund 30Y to € 19 bn. Also excluded is the planned issuance of the first Green Federal security in September 2020 via syndicate.

Structure of auction volumes (%) of nominal interest-bearing German Government securities

The composition of the auction volume of capital market securities shows a relatively stable pattern over the entire period, which was only slightly modified in the challenging financial market situation of 2009. At that time, short-term financing requirements were primarily covered by expanding money market issues.

The same approach is currently being reflected in the adjustments to the auction calendar for the second and third quarter. Compared to the previous year, the share of Bubills in the auction volume of all securities (without inflation-linked securities, ILB) will double from 22 % to around 47 %, but an expansion to a share of around 30 % was already planned on the basis of the annual preview published in December 2019.

Since the auction volumes of capital market securities will be increased to a smaller extent in relation to money market securities, their share of the auction volume in 2020 will decrease significantly. The shares of all ‘classic’ nominal capital market securities are almost halving, although this also stems from the rise of the two newly established maturity segments Bund 7Y and Bund 15Y. According to the auction calendar for the third quarter, only the auction volumes of ILB will remain constant in 2020. Their auction volume increased steadily in absolute and relative terms between 2015 and 2018. Since 2016, their share exceeded the long-term average of around 4%. In 2020, ILB’s share will drop below 2 %.
(2020: target figures; due to rounding, the totals may sometimes deviate by 100 %).