Germany Recasts Bond Game in First Ever 15-Year Syndication

(Bloomberg) -- Germany’s debt agency stepped out of its comfort zone, recalibrating an issuance strategy that served it well for decades to meet the largest post-war bond-sales target.

The institution known as DFA made a rare syndicated offering -- the last one was in 2015 -- and that too for a previously untapped term of 15 years as it seeks to diversify the maturities offered to appeal to a wider investor base. Traditionally, longer-dated German issuance has been concentrated in the 10- and 30-year tenors. The nation entered the syndicated market after such sales by Italy and Spain attracted record demand last month.

The agency raised 7.5 billion euros ($8.1 billion) from Wednesday’s sale after orders exceeded 35.5 billion euros for the new 2035 security, which priced 22 basis points over comparable bunds.

“The DFA is taking a safety-first approach by using a syndication for this new 15-year bond, which also reflects the larger and more frequent German issuance this year,” said Peter McCallum, a rates strategist at Mizuho International Plc, who had estimated the sale size at 6 billion euros.

The DFA mandated five banks to arrange the offering, according to a person familiar with the matter who asked not to be identified because they’re not authorized to speak about it. They are BNP Paribas SA, BofA Securities, Credit Agricole CIB, Commerzbank AG and HSBC Bank Plc.

Benchmark 10-year yields in Germany have fallen 33 basis points this year to minus 0.52% as global investors fled into top-rated government debt for safety amid the coronavirus pandemic. Thirty-year rates are down 42 basis points in 2020 to minus 0.07%.

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