The corona pandemic is forcing the German state to raise large amounts of funds on the bond market in the coming year.

As the finance agency responsible for debt management announced on Thursday, the federal government wants to raise more than 400 billion euros in debt in 2022.

It would be the third year in a row with borrowing above this mark.

Around 410 billion euros are targeted through auctions of federal securities.

But the volume can be even higher, which is also due to the supplementary budget of 60 billion euros that the new Federal Finance Minister Christian Lindner (FDP) is planning.

Markus Frühauf

Editor in business.

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In addition to the 113 auctions, the financial agencies reserve four more placements via syndicates, the volume of which has not yet been determined.

With the help of banks - the syndicates - the titles are placed directly with investors and are not auctioned off to the federal issuance group consisting of 33 banks.

These syndicate procedures were introduced during the Corona crisis and generated significantly higher demand than in auctions.

However, the German state has to pay the banks commission, which is why the auctions are cheaper.

Own holdings over 139 billion euros

In the year ending, the German state borrowed the record sum of 483 billion euros on the bond market, 11.5 billion euros of which in two syndicate proceedings.

These are among the instruments with which Tammo Diemer, managing director of the finance agency, wants to react to imponderables such as the supplementary budget.

In addition, the finance agency can raise additional funds by selling its own holdings or by short-term borrowing on the financial market, in which its own government bonds are used as collateral.

A new green federal bond

According to Diemer's own holdings of 139 billion euros are available. According to him, a low double-digit billion amount is being financed through the so-called repo transactions. Another 12.5 billion euros are planned for green federal bonds in the coming year. There will be a new five-year bond in the third quarter and four increases in the ten and 30-year bonds that have already been placed.

Diemer estimates that by the end of March 2022 the European Central Bank (ECB) and its affiliated central banks will hold almost 700 billion euros in federal securities.

Since these are mainly acquired by the Bundesbank, it is likely to be the largest creditor of the German state.

There are federal securities over 1.6 trillion euros in circulation.

Diemer is not afraid of a slowdown in bond purchases.

Rather, he expects the Bunds to be better tradable again.