From Bund scarcity to abundance

Germany's recent fiscal package is set to significantly impact its future funding landscape. With an allocation of €100b n for the Climate and Transformation Fund, €100 bn for Länder spending, and €300 bn for federal infrastructure projects, the total gross supply is projected to increase from €439 bn in 2024 to €678 b n by 2030. The DFA has indicated that while there will be no immediate rush to boost funding volumes, the DMO will reintroduce 7 Y Bunds in H2 2025 to address potential funding needs. The average maturity of Bunds is expected to remain stable, while the proportion of Bu b ill issuance will continue to hover around 33% of total supply. Looking ahead, issuance is anticipated to ramp up gradually, particularly from 202 8 to 20 30 , when net supply could approach €200 bn. The DFA may introduce a new 20Y bond by 2027 and rise the use of syndications, with average auction sizes expected to rise significantly to accommodate growing funding needs.