The financing needs of states continue to be high and market conditions create the perfect setting for governments to strengthen their appeal to the market. As the Spanish Treasury did in 2020, Germany is now following in its footsteps. If government activity has been intense in terms of attracting resources in the first three months of 2021, in the second quarter it will be even greater. A good example of this are the plans of the German government, which in the coming months will increase the issuance of debt by 2,500 million. The measures put in place to reduce the impact of the crisis are not free and to this are added the large deficits. In addition, for the next quarter the Government intends to increase the loans granted to companies to offset the impact of the restrictions. According to the Federal Finance Agency, between April and June Germany intends to place 59,500 million in bonds and bills, above the 57,000 million it estimated at the end of 2020.
Raises its goal by 2,500 million for the payment of loans to companies in trouble due to the crisis
But the changes may not be here. The German agency left the door open to make additional adjustments for the second half of the year given the uncertainty generated by the crisis and the challenges facing budget planning. However, the managing director of the agency, Tammo Diemer said that no significant changes are expected.
In a year in which long-term issues and sustainable debt are gaining adherents among European public bodies, Diemer confirmed the Executive’s plans to sell a 30-year green bond next May to which another 8,000 are added. million in title linked to inflation. With these operations, the total volume of issues expected for the year as a whole would reach 473,500 million euros, a record figure. At a certain distance, but also at maximums, are the gross emissions expected by Spain in 2021: about 289,138 million.
As Bloomberg points out, the increase in the volume of debt to be placed in the coming months, occurs only a week after Angela Merkel’s Executive approved the budget plans for the next two years. It included an additional 60,000 million of net debt for 2021. The aid given to the companies affected by the closure raises the total debt for this year to 240,000 million. Restrictions to slow the rate of spread of the virus have been in place for six months and will remain so until at least April 18. Looking ahead to 2022, the government is somewhat more optimistic and expects net debt to fall to 81,500 million, which would require the suspension of constitutional limits for the third consecutive year.
German debt has traditionally been considered a safe haven for investors and this has worked in their favor when it comes to borrowing at attractive prices. But since the outbreak of the debt crisis in the eurozone and in the last 12 months since the pandemic turned the world economy and markets upside down, the eurozone countries and other states such as the United Kingdom or the United States have had the favor of central banks. Following in the footsteps of the Fed, the ECB announced in March 2020 the launch of the purchasing program against the pandemic. Within the framework of this plan at the end of January the body chaired by Christine Lagarde had acquired 188,751 million German debt, a measure that has helped to keep financing costs at bay.
