German Sub-Sovereign Issuers’ Roundtable (September 2024)

Germany’s 16 Bundesländer (federal states) and their regional development banks are active and highly rated bond issuers. Despite Germany’s strict ‘debt brake’ which limits public sector borrowing — reinforced last year by a Constitutional Court ruling that caused a €60bn budget headache for the Federal government — the borrowing needs of the Länder are gradually increasing.

Some are recapitalising public sector banks or companies, some have allowances to cover cyclical deficits.

Meanwhile there is widespread acknowledgement that Germany’s infrastructure needs upgrading, and the climate transition will require large scale investment.

GlobalCapital gathered experts from three leading issuers, an investor and two investment banks for a roundtable in Frankfurt in September to discuss the challenges facing the sector.

They explained the effects of the debt brake and weighed up the market implications of recent elections in three eastern regions. The group explored how regions and development banks are changing their bond programmes to meet their funding needs, including issuing bigger benchmarks and seeking to grow their already substantial foreign investor bases.

And they debated the value of funding with different environmental, social and governance labels.