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Germany's sovereign bond shock shows how much the world has changed

Just when SSA bankers were getting used to a market supportive of deals again, Germany has surprised them with a change of approach.


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In normal times, you wouldn't instinctively bet on the Bundesrepublik Deutschland Finanzagentur to put the cat among the pigeons. But on Tuesday it said this:

"In addition, the Federal government intends to conduct syndicates in the second quarter."


Yes, you read that right. Germany is going to sell bonds through syndications.

To say this has left SSA bankers open-mouthed would be an understatement even in these interesting times. For run-of-the-mill euro funding, Germany does auctions, not syndications. Even its long-discussed green bond has always been touted as an auction.

Not for nothing does one head of SSA describe the move as the biggest story in his business. And things had been starting to settle down, hadn't they? As I write, bankers are talking of Wednesday as being the quietest day for weeks.

So, what brought Germany to this? And what does it mean?

Dislocated markets

Let's wind the clock back a bit.

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