4 Min Read
* Debt agency chief says wants to build up linker curve
* Does not see ECB bond-buying impacting German yields
* Says no reason to expect downgrade of German debt
By Sarah Marsh and Christina Amann
BERLIN, Jan 15 (Reuters) - Germany's debt agency is seeking the chance to issue bonds denominated in a foreign currency but volatile financial markets make it tough to find a window of opportunity that is long enough, the agency head told Reuters.
Carl Heinz Daube, who steps down on Wednesday after five years of administering Germany's one trillion euros of debt, also said the agency would continue to build up the curve of German inflation-linked bonds and was open about maturities.
"Last year we did spot a window of opportunity for (a foreign currency bond) but it was just too short as the markets were so volatile," said Daube. "We have to be sure that the window of opportunity holds for about a week."
The debt agency has also been steadily issuing inflation-linked bonds in an increasingly broad spectrum of maturities and has announced it would issue the so-called linkers this year on a regular monthly basis.
"We want to further build up the linker curve, make linker auctions more transparent and regular," Daube said. "We still have to see if we will issue a 30-year linker this year, we have to check which maturities work given demand and are open about the ones we will try."
Daube, who hands over the reins of the debt agency to Aareal Bank treasury chief Tammo Diemer on Wednesday, also said he did not expect euro zone bond purchases by the European Central Bank
(ECB) to impact German yields. "Until now the ECB bond-buying has had no impact on Bunds so I cannot imagine it will have in the future," Daube said.
Daube said the inclusion from 2013 of provisions making it easier to restructure euro zone government debt in a crisis - the "collective action clauses" (CAC) - would not impact bonds with top credit ratings such as Germany's.
From Jan. 1, newly-issued euro zone government bonds must carry CACs, making it the first developed market to impose such clauses routinely.
They allow a two-thirds majority of bondholders that agree to a restructuring to force a dissenting minority to participate. In future, everyone will have to share the pain, should a government go the same way as Greece and need to cut its debt burden radically to avoid defaulting.
"Even for countries with worse ratings, any impact of CAC clauses on prices is likely to be temporary. History shows you this, when Mexico introduced CACs in the mid-90s, prices varied only for a few months and then settled back down," Daube said.
"Average investors will likely actually find CACs reduce stress because they know no one, including hedge funds, would be exempt from a restructuring if that arose."
Daube said the inclusion of CACs would mostly impact liquidity on the strip markets.
The debt agency chief also said that he could not see any reason why the triple-A rating for Europe's largest economy should be downgraded this year, given rising tax revenues and its relatively strong performance. Data earlier on Tuesday showed the economy grew 0.7 percent in 2012.
Daube also said that while several auctions in 2012 had been technically uncovered, in part due to record low yields, the agency still did not believe in obliging primary bidders to buy up the debt on offer as in other countries such as France.
On average, there was twice as much demand for German debt as bonds on offer last year, and Germany's bidding system had proven popular enough for many banks to join its group of primary bidders throughout the crisis, Daube said.
(Editing by Stephen Nisbet)
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