The German Finance Agency has announced its plan to sell €92.5 billion in government debt in the second quarter of 2025. This includes bonds, bills, and the introduction of green bonds.
Debt Issuance Plans
According to the statement, the agency will allocate €62.5 billion to bonds and €30 billion to bills. Green bonds will also be introduced at three locations, although their volume remains undisclosed. These actions are part of Germany's plan to borrow less this year despite a struggling economy and pressure to support Ukraine.
Borrowing Costs Rise
Following the announcement, the price of German bonds soared, and the interest rates on decade-long debt fell to around 2.22%. Economists suggest that introducing more bonds into the market could raise interest rates, potentially prompting some members of the European Central Bank to reconsider their low-interest rate policies.
Military and Infrastructure Expansion
Due to the Russian-Ukrainian war, Germany plans to strengthen its military and improve infrastructure, such as transportation, energy, and digital networks. To facilitate this, Germany will continue selling federal debt and has proposed excluding defense spending from debt brake limits. A special €500 billion fund is also proposed to expand infrastructure over the next decade.
Germany aims to improve its economic and defense capabilities through government debt issuance, focusing on fiscal discipline, infrastructure enhancement, and national defense.
