Germany Tries to Find Out Who Its Investors Are
For the first time in five years, Berlin hired a syndicate of banks to run a bond sale. Even the mightiest issuers are having to do things differently now.
An expensive recovery.
Photo: Bloomberg
It’s not all sunshine and roses being Europe’s benchmark borrower. Germany has a unique problem in that its AAA-rated debt is so revered as collateral that it’s very expensive to actually buy. The country’s debt agency has sharply increased its second-quarter borrowing program to 130 billion euros ($140 billion) to help pay for the Covid-19 crisis. Given that investors already have to pay to lend money to Berlin, one might think this would be a challenge.
But Germany brushed off any such concerns on Wednesday with a successful new issue of 15-year bonds, paying zero interest and redeeming at face value (below the price investors will have to pay). Some 7.5 billion euros of bonds were on sale, and there was demand for 35 billion euros worth.