Germany Lifts Bond Sales by $2.9 Billion in Second Quarter

Germany increased planned bond sales in the second quarter by 2.5 billion euros ($2.9 billion), as the government ramps up borrowing to help offset the impact of the coronavirus pandemic.

Federal government bond issuance will rise to 59.5 billion euros in the April-June period, up from 57 billion euros planned at the end of last year, the Federal Finance Agency said Tuesday.

While the agency said that uncertainty due to the virus crisis and “related challenges” to budget planning could prompt additional issuance adjustments in the second half, Managing Director Tammo Diemer said that he did not expect any “significant changes” from today’s perspective.

The agency will be able to provide the federal government “with the means to fight the pandemic,” Diemer said on a conference call with reporters.

He also confirmed plans to sell a maiden 30-year green bond in May and as much as 8 billion euros in inflation-linked securities, taking total issuance volume for the year to as much as a record 473.5 billion euros.

Chancellor Angela Merkel’s cabinet last week approved the government’s budget plans for this year and next, including an extra 60 billion euros in net debt for 2021.

The additional borrowing takes the total this year to more than 240 billion euros, as Germany spends freely to support businesses affected by the coronavirus shutdown. The restrictions have been in place for several months and will remain in force until at least April 18.

In 2022, Finance Minister Olaf Scholz is targeting net borrowing of 81.5 billion euros, requiring a suspension of constitutional debt limits for a third straight year.

An update or confirmation of the issuance schedule for the third quarter will be published in June.

©2021 Bloomberg L.P.

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