FAQ
Union and SPD want to debts – for the military and infrastructure. Germany will therefore have to record new billions of billions – by issuing federal bonds. What does that mean?
The fact that the new federal government will probably accept high debts for defense and the infrastructure ensures turmoil on the market: the returns, i.e. the capital market interest rate for federal bonds, are on high flight. The return for ten -year federal bonds rose up to 2.93 percent yesterday.
Before the announcement of the huge fiscal package in Germany, it was still under 2.50 percent. On Wednesday, the return on one day had risen as much as it has not been since the reunification in 1990.
How exactly does this financing system work with which states get fresh money? Answers to the most important questions.
What are federal bonds?
The federal government is accepting money on the capital market with federal bonds. That means he takes a loan. In this way, the state covers its government spending when they exceed the tax revenue. With the purchase of a government bond, the investor lends money to the state for a certain time and receives a defined interest rate, the so -called cupon.
Government bonds are not necessarily held until the due date, but – similar to stocks – are traded on the financial markets. Investors can make price gains or losses through sales and purchases, depending on the supply and demand.
Bond courses are given in percent of the nominal value. The nominal value corresponds to a course of 100 percent. If, for example, the course of a five percent interest bond falls by one percent, the return increases from five to six percent. The return is the interest that you would get if you last bond until the end of the term.
Federal bonds have a term of ten or 30 years. There are also federal treasures with a term of two years and federal bodies with a term of five years. However, the ten -year federal bond is considered directional.
Why is the returns rise so strongly at the moment?
The trigger for the strong increase was the huge financial package announced last Tuesday by the Union and the SPD. In order to cover the costs through appropriate loans, the government will have to spend new bonds on a large scale over the next few years, i.e. start new debts.
The higher offer should make it more difficult to find buyers in the current interest. The federal government as a debtor must therefore offer a higher risk premium so that investors continue to borrow money from the state.
This is already anticipated at the markets. Since the actors at the financial markets generally expect the future government bonds that the German state emit to be more interest in order to be attractive for creditors, the courses of the existing and traded bonds are falling. In return, the returns rise.
Could the buyers fail for government bonds at some point?
“There are always buyers for European, especially German bonds,” says Arthur Brunner, bond expert at ICF Bank, in conversation with tagesschau.de firmly. According to his assessment, the sovereign funds such as Singapore, insurer or banks are. But private investors can also buy government bonds.
“The German federal bond is the foundation of the euro zone. It is considered a risk-free interest rate and the safe port in times of tense markets,” writes Tomasz Wieladek, chief economist for Europe at the US financial service provider T. Rowe Price. Commerzbank analyst Hauke Siemßen also assumes that the demand is sufficient: it is not about whether the federal government will find enough investors for the necessary government bond emissions, but rather, at what price.
Around 30 percent of the federal securities are currently owned by central banks and public institutions in the euro area, as the financial agency of the Federal Republic of Germany reports. It is responsible for debt management, borrowing and cash management of the federal government. Banks in Germany, banks in the euro area and other investors in Germany are kept in Germany each.
What does that mean Debt admission For inflation?
The additional debt admission reduces the scope of the European Central Bank (ECB) for further key interest rates. As a result, the higher domestic demand resulting from the spending package should also begin inflation.
So yesterday the ECB reduced interest rates. For the next meeting in April, however, no further interest rate reduction was clearly promised. Many economists assume a break. This also supports the returns of bonds. “The probabilities have shifted, in April a lot speaks for an interest break,” explains bond dealer Tim Oechsner from Steubing AG.
How high is the risk that the return will change again soon?
The returns of bonds are influenced by a variety of factors. First of all, it is not certain whether the Basic Law can actually be changed. The Greens' approval is needed here. So there may not be a fiscal package at all. In addition, the government could make savings elsewhere.
In addition, a special fund is to be created for the repair of the infrastructure with 500 billion euros. It should have a term of ten years. Additional expenses are also expected at EU level.
It should also be crucial how economic growth develops. Higher economic growth could lead to higher tax revenue. This would reduce the need for new debts.
Inflation development and monetary policy of the European Central Bank also influence the bond courses. Geopolitical development could also affect the returns. In the event of increased uncertainty, bonds are required because they are considered comparatively safe.
German bonds are still particularly safe. The rating agencies continue to give German creditworthiness. Germany therefore has to pay fewer interest compared to other countries.
Are credit rating possible on Germany?
Germany not only has by far the best financial policy fundamental data in Europe, they are unsurpassed among the world's great markets, says Verlagwirt Wieladek. The fundamental data decide on the classification of creditworthiness. According to the rating agency Scope, Germany will be able to keep its first -class credit assessment.
Even if the new financial package increases the debt by 2029 to around 3.6 trillion euros or around 72 percent of gross domestic product (GDP), the debt rate remains under its previous maximum of 80 percent, which was achieved in 2010 after the global financial crisis, Eiko Sievert, scope-lead analyst for Germany.
Hannah Thielcke, an economist at Weberbank, also sees no danger to the credit rating: “The fiscal policy measures planned by the likely future coalition are not big enough in themselves to endanger Germany's credit aging.”
However, Wiedalek points out other possible consequences of the return on the return: “If the new level of long -term bonds for other large countries of the euro area is now four to five percent, this will have a significant impact on the load -bearing capacity of the debts of these countries.” Since more federal bonds are to be bought, the markets would probably put more pressure on these countries, to reduce their high debts, either due to tax increases or by cuts in government spending, Wieladek expects.
