To encourage greater participation from private investors in Germany’s essential infrastructure and defense investments, Paul Achleitner, former Chairman of the Supervisory Board of Deutsche Bank, is proposing the implementation of state-backed credit guarantees as a form of risk mitigation. In a commentary published in the Handelsblatt, Achleitner highlights a proven model already utilized within Germany.
He points to the existing Hermes Cover system, which effectively insures export transactions, as a successful precedent. This existing framework demonstrates Germany’s ability to leverage government backing to stimulate private sector involvement in strategically important endeavors.
Achleitner notes that the recent parliamentary decision to relax Germany’s debt brake has already generated significant interest from international investors. He believes that this approach could particularly benefit Germany’s Mittelstand – its small and medium-sized businesses. While large defense corporations typically secure financing readily, many smaller suppliers often face challenges accessing affordable capital, especially for short-term production capacity expansion.
The breadth of projects typically covered by such guarantee systems allows for broad diversification of risk, with claims typically representing less than 1.5% of state guarantees. Achleitner, currently advising HPS, a credit manager associated with Blackrock, suggests extending this successful principle to the vital infrastructure and defense investments currently prioritized by the nation.
