Fixed Income Analysis /
Global

Strategy Flash - Rates: Germany to cover additional deficit via other funding sources while keeping 2Q21 issuance objective mostly unchanged

    UniCredit
    31 March 2021
    Published byUniCredit
    • The recent increase in borrowing requirements for this year (EUR 60bn) will be mostly covered through other funding sources, which include pre-funding, repo transactions and the sale of bonds held by the Finanzagentur. In light of their higher flexibility relative to primary market activity, these sources are likely to be used in case there are further revisions to Germany’s fiscal budget.
    • With respect to issuance activity, the German Finanzagentur has revised slightly its funding guidelines for 2Q21, increasing issuance of medium/long-term bonds by EUR 2.5bn, while Bubill supply was kept unchanged. Hence, in the upcoming quarter supply pressure will increase only moderately compared to the original funding plan.
    • In 2Q21, Germany will issue a new 2Y Schatz, a new 7Y Bund and a new 10Y Bund via auction and a new 30Y green Bund (the inaugural green Bund at this tenor) via syndication.