Euroland Municipal Bonds: New city states
The Saxon city of Leipzig sounded the overture of Emu's municipal bond sector. On the euro's first day in the financial markets, 4 January 1999, it issued a bond of €100 million, listed in the German market but aimed at foreign investors too. Like Spain's Basque Country, it hoped for a change in Europe's consciousness, not just cheap money. The so-called Bach bond, commemorating Leipzig's Baroque composer born 250 years ago, was timed to win maximum publicity. "We wanted to make euroland aware of Leipzig," says Peter Kaminski, deputy mayor and councillor for finances.
Like all towns in former East Germany, Leipzig is eager to attract the investment that would give it a self-sustaining economy, no longer dependent on central government spending. Leipzig has the benefit of a rich cultural heritage and a long-standing international trade fair. But it wants more international corporates to locate there. It's too early to say whether the Bach bond will help Leipzig improve its meagre record on foreign investment. Kaminski thinks the promotional aspect of the bond was a success.