Germany will borrow less from markets in 2012
Germany, still seen as a eurozone safe haven, intends to borrow up to 250 billion euros ($329 billion) from the markets in 2012, less than this year's level, the federal financing agency said on Wednesday.
"The annual preview of government issuance in 2012 contains one-off issues with a total volume of 250 billion euros, which will serve to finance the federal government budget and the special funds of the federal government in 2012," the agency said in a statement.
In 2011, Germany borrowed 275 billion euros, with two-thirds coming from the bond market and one-third from the money market.
The fresh funds will be used to repay the country's debts and the interest on them, the agency said.
Germany, Europe's top economy, has more than 2.0 trillion euros in debt or more than 80 percent of its gross domestic product, resulting in interest charges of tens of billions of euros annually.
It benefits from lower borrowing rates compared to many of its partners in the eurozone, which have been hit hard by sinking investor confidence.
However market volatility has taken its toll.
Investors shunned a November auction of German 10-year bonds, considered the gold standard of eurozone debt, in a development that sent shock waves through the single currency area.
But it had better luck with an issue of two-year treasury notes this month which saw strong demand and brought in more than four billion euros.
An analyst from Commerzbank, David Schnautz, said the German plans pointed to a trend in which stronger eurozone countries offered longer-term bonds while debt-laden states would seek a quick turnaround.
"The German issuance calendar clearly vindicates our key supply view that core countries will be keen on moving out the maturity spectrum -- in sharp contrast to the periphery," he said.
Schnautz said Germany could ramp up its borrowing if an economic downturn expected next year is sharper than predicted.
In its breakdown of government borrowing, the agency said it would continue issuing treasury discount papers or "Bubills" on a six-month basis (four billion euros) and a 12-month basis (three billion euros) next year.
New federal treasury notes with two-year maturity known as "Schaetze" will be auctioned in February, May, August and November, with an outstanding volume for each note set at 15 billion euros.
Five-year federal notes or "Bobls" will also continue with three new series with a volume of four billion euros. Reopenings of the note are planned for February, March and April with a total volume of 15 billion euros.
Another series will be issued in May and September with a volume of five billion euros each.
Federal bonds with a 10-year maturity, known as "Bunds", are planned in 2012 with a total outstanding volume of 20 billion euros. Thirty-year Bunds will have a total outstanding volume of 15 billion euros.
"Depending on the funding requirements and liquidity situations of the federal government, as well as on the market situation, the amounts and issue dates in the annual preview remain subject to change," the agency said.
"However the federal government intends to adhere to the announced issuance calendar as far as possible in order to provide market participants with a sound basis for their investment decisions."
© 2011 AFP