Status: 13.09.2021 4:57 p.m.
It almost sounds like the best of all worlds: the federal government issues new bonds and earns money with them. In the current year he has made several billion pluses in this way.
The federal government earned billions in the first eight months of the current year. The reason is the taking on of new debt. When issuing federal securities to finance the budget, including special assets, “payments of around 4.251 billion euros were received” from January to August. This emerges from a letter from the parliamentary state secretary in the Federal Ministry of Finance, Sarah Ryglewski, in response to a request from the Bundestag member Fabio De Masi (Die Linke), from which the news agency Reuters quoted.
Investors give money to the federal government
The amount collected is due to the negative interest rates on the capital market. Investors give the federal government more money when they borrow than they get back in the end. “German government bonds are so popular that buyers give us money,” said De Masi.
The finance agency responsible for debt management allocated federal securities worth more than 275 billion euros to investors by the end of August. The average return on issue was minus 0.55 percent. Still, there was more investor demand than bonds were on offer. The most important international rating agencies give Germany the top rating of “AAA”. This means that the repayment of the Bunds issued is considered secure.
The repayment is safe
Despite the supposed security, long-term government bonds in particular carry a risk: If long-term interest rates rise sharply on the capital markets, the bonds issued to date would lose a great deal of value.
Overall, the finance agency wants to borrow the record volume of more than 480 billion euros from investors this year. In April, the Bundestag passed the supplementary budget for 2021 with a record new debt of 240 billion euros. In addition to these new debts, the federal government must also refinance old debts.