The German federal government will rely less on the international money markets and capital markets in 2025 compared to 2024. A total of 380 billion euros is expected to be raised via auctions of short-term money market instruments (Bubills), and securities with maturities ranging from two to 30 years. In addition the federal government will carry out two syndicates will be involved. The volumes for these are not yet determined, but are expected to be around 9 to 10 billion euros, which is in line with syndications in 2024.

The annual issuance outlook was announced on 17 December by the German Finance Agency (Deutsche Finanzagentur), which is responsible for liquidity and debt management for the federal government.

The capital needs, according to Tammo Diemer, who is responsible for capital market activities at the Finance Agency, are based on the current government draft bill, which anticipates net borrowing of 51.3 billion euros. Additionally, 338 billion euros will be required for refinancing existing securities, and 22 billion euros is planned for defence spending. The overall financing need for next year is estimated to be „around 410 billion euros.“

In 2024, a total of 438.5 billion euros was raised through the money markets and capital markets. Of this, 425 billion euros came from 123 auctions, and an additional 13.5 billion euros was raised via syndication. According to Diemer, there was strong investor demand, with total demand for its offerings reaching 756.6 billion euros (Bid/Offer ratio of 1.78). The average issuance yield was 2.73%.

In 2025, the federal government plans to raise 240 billion euros through conventional federal securities in auction procedures. 126 billion euros will come from shorter-term money market instruments. The green bond segment will also be further developed, with 13 to 15 billion euros expected to be raised through green „Bunds“. In the coming year, the first green federal bond, issued in 2020, will mature. The government intends to continue expanding this segment, and will issue a new ten-year green federal bond. The total volume of green bonds issued by the federal government currently stands at 73.25 billion euros.

In recent weeks, the Bund swap spread turned negative for the first time in over 20 years. This has sparked discussions, with some market participants expressing concerns about the potential reduced placement capacity for federal bonds and other countries’ bonds due to widening budget deficits and rising government debt.

„The Bund yield has underperformed compared to swaps, but this was also the case for bonds from other countries. We're closely monitoring this. It leaves a lot of room for interpretation“, says Diemer. Germany's top debt manager offers two explanations for the negative Bund swap spread. The first is the free float, or the volume of federal securities available for trading, which has been increasing. The second reason, according to Diemer, is market volatility. Regarding the placement prospects of federal bonds, Diemer states: „I see very strong demand from investors for Bunds.“ He emphasised that Germany's creditworthiness has no impact on the Bund swap spread.

According to the plans for the upcoming year, 70.5 billion euros will be raised through Federal Treasury notes (two-year maturity), which accounts for 19.3% of the federal government's total refinancing. Five year Federal notes will amount to 62.5 billion euros (17.1%). Federal bonds with a ten-year maturity will raise 64 billion euros (17.5%), while 17 billion euros (4.6%) will be raised through 15-year bonds. Finally, 26 billion euros (7.1%) will come from thirty-year bonds.