By Rene Wagner

BERLIN (Reuters – Germany’s government earned billions from its debt issuance in this year, thanks to the negative interest rates it paid on its securities. This is according to a letter sent by Florian Toncar, Finance Ministry State Secretary, to a left-leaning lawmaker.

Toncar, in response to Christian Goerke of the Linke far-left party, asked Toncar if he had collected payments totalling 5.855 billion euro when issuing federal securities for financing the budget.

In order to cope with the consequences of the coronavirus pandemic the federal government has borrowed an unprecedented 483 billion euro ($544.44billion) from financial markets. That’s about half the amount that it did in 2020 when it hit its previous record.

Toncar reported that the average yield of federal securities this year was less than 0.56%. However, auctions were oversubscribed 1.7x.

Goerke said that German bonds, even with negative yields are still selling hotly in Germany. He is a member of the Linke opposition group at the Bundestag, the lower house. “The federal government could sell even more bonds with no problem.”

German Finance Agency (the government’s arm for debt management) plans to issue debt worth 410 billion euros in the following year.

German government bonds have been rated “AAA” from all the major rating agencies. This is because they are very safe and investors are keen to purchase them.

Paper is also in high demand. Large purchases made by the European Central Bank increase paper supply, which drives down yields.

($1 = 0.8872 euros)