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.

Over 90 percent of the Federal Government's funding needs are covered via one-off issues as part of the 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 quarter will now lead to almost triplication of money market issues compared with 2019 to € 118.5 bn. Compared to the initial annual preview, the additional € 56.5 bn in money market borrowing is distributed  roughly to a third to 6-month Bubills and to almost two thirds into new 12-month Bubills, which will be newly issued monthly from April onwards.

By contrast, the auction volume of capital market securities will increase relatively moderately by € 19 bn to € 167 bn, compared with the 2020 annual forecast due to the adjustments in the second quarter. The additional volume will be divided between Schatz (€ +2 bn), Bobl (€ +3 bn) and Bund10 (€ +3 bn). In addition, new maturities will be introduced for the first time in years in the second quarter with seven-year Federal bonds (auction volume: € 10 bn) and 15-year Federal bonds (planned re-opening volume per auction: € +2.5 bn). The 2020 auction volume does not include a Bund15- and a Bund30 syndicate. The latter will replace a Bund30-auction, which reduces the total auction volume by € 1.5 bn. Compared with the previous year, this leads now to an increase of € 14 bn, instead of the originally planned reduction of € 5 bn in capital market borrowings.

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 quarter. Compared to the previous year, the share of Bubills in the auction volume of all securities (without inflation-linked securities, ILB) will almost double from 22 % to around 42 %, 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 are only increased to a lesser extent in relation to money market securities, their share of the auction volume in 2020 will decrease. According to the auction calendar for the second quarter, only the auction volumes of ILB will remain constant in 2020. By contrast, 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 to 2 %.
(2020: target figures; due to rounding, the totals may sometimes deviate by 100 %).