PRESS Release: Federal

Federal is not liable for country risks – get coupons of the Federal States of the individual German Federal States will have to pay for their bonds in the future significantly higher interest rates than in the past. The fuchsbriefe expect following a request in the Federal Ministry of Finance (BMF). Opposite fuchsbriefe, the BMF announced that the Federal Government not for country bonds will stick. This also applies to the planned joint Germany-bonds by federal and State Governments, so the BMF to fuchsbriefe. Liability for its respective share of an issue lie therefore exclusively in the respective State. The situation in Germany thus same those in the euro. Here too, the markets were a decade falsely assumed by a community liability and had almost equally valued economically how financially strong and weak countries.

This knowledge will move initiated now BBs, from Moody in the focus of investors. The spreads for State bonds are in the markets under the aspect that the Federal Government is not liable clearly too low, notes Fox letters. The markets believed that there was a kind of global liability of the Federal Government. However, that is not the case. The Federal Government was indeed train an extreme budget crisis of a State obliged to secure the liquidity of the Lander for their original state tasks such as police or education. Loan liabilities were it but except, said the Ministry of Finance on request.

Since the outbreak of the crisis in 2008, the interest rate gaps between federal and State Governments are already grown. They were then 0.1 up 0.2 per cent, there are now up to 0.9. This margin is likely to rise more clearly now. The volume of bonds issued by States is 320 billion euros. Fuchsbriefe is indeed to imagine that enter the Federal Government eventually but for the bond obligations of the countries. This, however, is not automatic and may take some time for the actual implementation. During this period which would strongly advised course of land bonds under pressure, if mainly foreign investors their money withdraws. Fuchsbriefe remind in this context, that at the launch of the ESFSESFSESFSESFS was also intended to ensure the liquidity of Greece. This not stretched but on Government bonds, as investors had learned with a loss of about three-fourths of their invested capital.