Ultra-long debt issuance may be bit more challenging as yields rise – German DMO official

LONDON (Reuters) – Issuing ultra-long debt may be a bit more challenging in an environment of rising bond yields, an official at Germany’s debt management office said on Thursday.

“We are a continuous issuer so we have to deal with the market we are faced with but we can play with the portfolio,” said Christian Wellner, head of strategy at Germany’s Finanzagentur.

“So, we can listen to what they (markets) are asking, so maybe issuing ultras maybe be a bit more challenging,” he said during an OMFIF debate on the outlook for European sovereign borrowing.

Governments across Europe have taken advantage of a low-yield environment in recent years to issue longer-dated bonds, locking in low borrowing costs.

But with yields now rising as inflation heads higher, there may be some caution among issuers in issuing ultra-long dated bonds, the panelists said.

Ultra-long bond issuance “does have some nice aspects but Germany is the benchmark so if it is coming with a new issue then it is strategic rather than opportunistic,” Wellner added.

Germany’s 10-year bond yield rose above 0% on Wednesday for the first time since 2019.