REFILE-Germany bolts on syndication to cope with funding surge

Quick read
EMEA

Germany is planning to syndicate its first bond in five years as it looks to address a surge in its funding requirements due to the coronavirus.

The sovereign said it is planning the sale of a new 15-year in May. The Finanzagentur, which raises funding on behalf of the government, is also planning a syndicated tap of the 0% Aug 2050 in June. Further syndications "are possible in the second half of the year".

"Overall, the financing and liquidity requirements of the Federal government’s budget and its special funds will increase both in the current quarter and in the further course of the year," the Finanzagentur said in a statement.

Germany's last syndicated transaction was in 2015, when it priced a €2.5bn inflation-linked bond.

"This is a complete novelty that they would do a syndication for something that already exists," a DCM banker said. "They've used syndications before for their linker which was unchartered territory or US dollars but never for points on the curve that already exist. That's very much their bread and butter business in auctions."

Sovereigns such as Austria, Belgium, Spain and Portugal have all taken to the syndicated market in recent weeks to raise large chunks of funding to tackle the fallout from the coronavirus.

However, these issuers are regular users of the syndicated format, unlike Germany.

"This says it all if they're having to deviate from their usual methods," another DCM banker said.