At the highest levels of the last 17 months, the yields of German bonds have been fired, under the threat of debt. Is Germany’s worthy in danger?

Immediately after the official announcements in Berlin for the “budgetary bazouka” 500 billion euros on Thursday, the yield on the decade of German bond climbed to 2.93%, that is, at the highest levels since 2011. On Wednesday it was still at 2.5%. Were the largest rise within 24 hours From the reunification of Germany in 1990.

It is noteworthy that in December 2024 the yield on the ten-year bond did not exceed 2%, while in 2019-2020 it had passed into a negative sign, ie Creditors essentially paid Germany to lend her money!

Of course, increased performance is extremely enjoyable for the investor who wants to buy bonds by lending his money to the state, as he can expect higher income on the expiry date of the bond. It is also a very good development for the one who has already supplied bonds and plans to sell them through the capital markets, making a profit.

Higher risk, greater performance

But for the state issued by the bond and for taxpayers who essentially support the search for “borrowing” in the markets, ‘increased performance’ is a huge problem. As we remember from the Greek debt crisis, the bond’s performance is directly proportional to the risk of non -repayment. Simply put, when the aspiring buyer considers that the publisher of the bond may not be consistent in his obligations, it requires a higher return, greater “performance” to lend his money.

Thus, in November 2009 the Greek 10 -year -old Greek bond was exceeded 5%, while in December 2014 it was approaching 9%. The Greek State was not able to borrow money under these terms and therefore could not refinance its debts earlier. He was therefore forced to resort to successive rescue programs with the participation of the International Monetary Fund (IMF), against painful reforms and cuts.

“There are lenders, but …”

Obviously, the current situation in Germany is not compared to Greece in 2009. “There are always buyers for European and especially for German bonds,” says Artur Brunner, an ICF Bank economist on tagesschau.de. For his part, Commerzbank analyst, Howk Simsen, He estimates that “the question is not if there are enough investors, but at what price they are willing to invest in German government bonds.”

The other view is that Germany’s growing debt can adversely affect the country’s evaluation of credit ratings, with what it entails. AlreadyThe German Court of Auditors estimates that only the establishment of the Special Fund is going to burden the state budget with additional 37 billion euros of interest on After 2035. Speaking to the Euro Economic Magazine, Hans Werner Zin, former head of the IFO Institute of Munich, warns that “Everything is judged by the German’s worthy. If Germany makes the mistake of following the example of France or Italy, the European Monetary Building is in danger of collapsing. “

At a political level, however The objections have been mitigated to 500 billion “budgetary bazouka”. The Christian Democrats (CDU) of the future Chancellor Friedrich Mertz and the Social Democrats (SDP) agree to set up a Special Fund. Only the outgoing president of the Liberal Party (FDP) and former Finance Minister Christian Lindner is ringing the alarm that Germany’s Triple A, that is, the excellent evaluation of the houses, may be in danger. Contrary to the Special Fund is the “Alternative for Germany” (AfD), which has already appealed to the Supreme Federal Constitutional Court. Optimists, however, recall that even at the height of Eurocrystation, with public debt reaching 82% of GDP, Germany had managed to maintain excellent AAA assessment.