The German government has made billions of euro from debt issuance this year thanks to negative interest rates on its securities, according to a letter from Finance Ministry State Secretary Florian Toncar to a leftist lawmaker.
Payments amount to around 5.855 billion euros were collected when issuing federal securities to finance the budget and special funds, according to Toncar's letter in response to a question from Christian Goerke, of the far-left Linke party.
The federal government borrowed 483 billion dollars $544.44 billion on financial markets this year to cope with the coronaviruses epidemic, about a fifth more than in 2020, when it first hit its previous record.
The average yield on federal government securities issued this year was minus 0.56%, Toncar wrote. Auctions were 1.7 times oversubscribed.
Goerke, a lower house of parliament with the opposition Linke, said German bonds are selling like hot cakes despite negative yields. It's possible that the federal government could have sold even more bonds without a problem. The German Finance Agency, the government's debt management arm, plans to issue 410 billion euro over the next year.
German government bonds are highly sought after by investors as repayments are considered to be very secure, as rated AAA by all major rating agencies.
The European Central Bank purchases large amounts of paper increase demand, which in turn pushes down yields.