The German state finances itself historically cheap: Investors accept negative interest rates. Sustainable debt also has a discount.

May be happy about the green federal bonds: Federal Finance Minister Olaf Scholz and his State Secretary Jörg Kukies (right).

AThis Wednesday it should be uncomfortable for Jörg Kukies, State Secretary in the Federal Ministry of Finance. Because he has to explain to the Bundestag committee of inquiry why the financial supervisory authority Bafin failed in the Wirecard affair. On Tuesday, Kukies, who is the chairman of the Bafin board of directors, was able to publish a report of success: a first interim balance sheet on the market presence of the federal government for the green federal bonds issued for the first time last year.

And his first conclusion was clearly positive: “The federal government’s market presence with green federal securities was spot on. Thanks to the innovative twin concept, we have succeeded in clearly showing the price advantage for green issues. ”Because the green government bonds are traded on the bond market with a lower yield than their conventional twin bonds. In the ten-year term it is 0.05 percentage points less, in the five-year term around 0.03 percentage points.

On the capital market, the lower interest rate for green bonds, which is due to a higher price, is called “greenium”. This is an artificial word from the English terms “green” and “premium” (premium). This green premium is difficult to determine for other debt instruments, while it is clear for Bunds. Because the German state and the finance agency responsible for the issues decided on a so far unique concept last year: For every green federal bond there is a conventional counterpart, which is why we speak of twin bonds here.

The goal is a green yield curve

The yield gap between these stocks then represents the “greenium” that speaks in favor of green stocks. The goal is a green yield curve. So far, there are five- and ten-year titles. In May, a 30-year green federal bond is to be added for the first time, as the finance agency announced in its issuance plans in mid-December.

With the price advantage of green stocks and a green interest rate curve, the federal government will, in the words of Kukies, “make an enormous contribution to the growth of the sustainable bond market”. Germany will be brought very far as a location for sustainable finance, added the former Germany boss of Goldman Sachs.

Allocation for expenses already made

As can be seen in the “Allocation Report for Green Federal Securities” published for the first time on Tuesday, the issue proceeds of 11.5 billion euros contrasted with green spending in the 2019 budget year of 12.3 billion euros. Here, too, the federal government takes a different approach than most green issuers, because it only assigns the proceeds from the sustainable bonds to expenditures that have already been made in retrospect.

The managing director of the finance agency, Tammo Diemer, had stated this after the debut loan in September in an interview with the FAZ that a state issuer could never make promises for future expenditures. The financing of the sustainable expenditure made in the previous year would create transparency and security for the capital market and the creditors. The green expenditure is attributable to federal environmental and climate protection programs. An impact report is to be published for the first time in mid-2022.