The Federal Financing Agency anticipates a substantial and growing need for funding in the coming years, projecting figures reaching 500 billion euros annually and potentially exceeding that amount.
Speaking to the Frankfurter Allgemeine Zeitung, Tammo Diemer, Managing Director of the Federal Financing Agency, confirmed the expectation of increased financing requirements. The agency has already adjusted its issuance plans for 2025, increasing the projected debt uptake by 34 billion euros. High demand for German government bonds remains a key factor, with average orders consistently exceeding the offered volume – approximately 1.7 times the offered amount thus far this year.
Regarding the rise in interest rates for long-term German government bonds, Diemer attributed this trend to market uncertainties, rather than concerns about creditworthiness. He explained that investors, particularly those committing to investments spanning 30 years, seek compensation for perceived risks. This increased interest rate differential between 30-year and 10-year bonds is described as a global phenomenon, impacting major currency zones.
Eva Grunwald, Co-Managing Director, addressed the federal government’s stake in Commerzbank and the potential acquisition plans of the Italian banking group Unicredit. Grunwald stated that Unicredit’s approach had not fostered confidence. Despite the federal government’s stake, currently at 12.6 percent, which surpasses the break-even point, a sale of Commerzbank shares is not currently planned. The inter-ministerial steering committee has decided, for the time being, to refrain from selling additional shares in the bank.
