Germany has run into trouble raising funds for its energy crisis plan, which is supposed to mitigate the effects of soaring energy prices on citizens and businesses, Reuters reported . The government failed to attract enough investors to buy German government bonds, the money from the sale of which was planned to be used for a massive plan.
The German authorities failed a recent auction of five-year bonds – a low interest rate pushed investors into bonds. Moreover, buyers of debt securities see a difficult situation in Europe due to the energy crisis and believe that due to record inflation and a slowdown in the economies, rates on new bond issues will continue to go up, which means there is no need to rush to buy bonds.
“Recent auctions have been very, very bad. The market is dominated by buyers,” says Michael Leister, head of strategy at Commerzbank.
Similar problems with longer-term securities, the agency cites an auction of €4 billion in securities with a maturity date in 2029 as an example. The German authorities were unable to sell even half of the volume, investors bought securities for only €1.78 billion. Demand for German bonds, according to the agency, was the lowest since 1999, despite the fact that German bonds in the EU are considered the most reliable, with a minimum of risk .
Experts also note that Germany has to compete for a buyer with other countries that are also increasing borrowing, including the European Commission itself. The agency estimates the total EU spending to combat the energy crisis at €400 billion, and German spending at €200 billion. At the same time, some countries do not experience such problems. For example, France last week held its own bond auction for a total of €10 billion, which was a success.
Germany was the most affected country as a result of a sharp reduction in Russian gas supplies to Europe. The high dependence of Germany on Russian fuel has led to a sharp jump in energy prices, and also provoked an increase in inflation. To mitigate the consequences of the energy crisis, the authorities approved a large-scale anti-crisis assistance package, which they are trying to finance with the help of a new issue of public debt.