{"id":477,"date":"2020-02-21T21:49:42","date_gmt":"2020-02-21T21:49:42","guid":{"rendered":"https:\/\/www.finahukuk.com\/en\/?p=477"},"modified":"2020-02-27T14:41:27","modified_gmt":"2020-02-27T14:41:27","slug":"government-issues-in-europe-and-quantitative-easing-a-balance-game","status":"publish","type":"post","link":"https:\/\/www.finahukuk.com\/en\/2020\/02\/21\/government-issues-in-europe-and-quantitative-easing-a-balance-game\/","title":{"rendered":"GOVERNMENT ISSUES IN EUROPE AND QUANTITATIVE EASING: A BALANCE GAME"},"content":{"rendered":"\n

According to the official financing strategy documents published by the national treasury ministries of the seven main nations of continental Europe, gross government bond issues in 2020 should amount to around \u20ac 744.2 billion, therefore around \u20ac 4 billions of euros more than 2019 emissions.<\/strong><\/p>\n\n\n\n

This increase is attributable to a marked containment of the net financial needs of the European countries.<\/strong><\/p>\n\n\n\n

In this sense, it is not unreasonable to conclude that, being the volume of repayments approximately similar to the volume 2019 (respectively 647 billion euros<\/strong> today compared to 640 billion euros 2019<\/strong> ), experts estimate that the greater public expenditure<\/strong> should translate into an increase in gross emissions<\/strong> of government bonds. Even the net issuance<\/strong> of government bonds, which include equal to gross issuance net of redemptions, may decline slightly during 2020 (approximately 128 billion euro<\/strong> from 130 billion euro in 2019<\/strong> ). Note on the other hand that, this reduction in the stock<\/em><\/strong>total net issues in 2020 could be accentuated taking due account of the effect<\/strong> of ECB<\/strong> government bond purchases<\/strong> under the Asset Purchase Program ( APP<\/strong> )<\/em> .
However, it should be remembered that the German<\/strong> treasury has clearly declared itself in favor of using the issue of banknotes<\/strong> to replace bonds in order to finance the state coffers. This preference should be read in market terms as an additional factor contributing to increase the scarcity of German paper in light of the greater demand from <\/strong>APP <\/strong>ECB<\/strong> .<\/p>\n\n\n\n

The central issue dealt with in this paper is in this sense to understand how European government bond issues can on the one hand provide<\/strong> fresh resources<\/strong> to the public accounts of the respective states, on the other hand support the markets by<\/strong> absorbing the demand deriving from the ECB Quantitative Easing<\/em><\/strong> .<\/p>\n\n\n\n

In this perspective, the issue of public debt must support both the extension of maturities<\/strong> and the active management<\/strong> of the financial structure of the respective states.<\/p>\n\n\n\n

Some major investment banks have estimated a slightly higher<\/strong> bond issue in the euro area than in 2019, partially attributable to higher redemptions than last year and partially to the so-called fiscal easing<\/em><\/strong> . Not a few analysts have also put forward the hypothesis that some European states put ‘green’ <\/strong>bonds<\/em><\/strong> on the primary market,  that is, that particular type of bonds intended to finance projects with a positive environmental impact. According to experts, Germany<\/strong> , Italy<\/strong> and Spain<\/strong> will open their debuts this year as issuers of this particular type of bond asset<\/em> .<\/p>\n\n\n\n

Turning to an in-depth analysis of the articulation of the emissions<\/strong> at national level, according to some market assessments Germany<\/strong> , the Netherlands<\/strong> , Austria<\/strong> , Finland<\/strong> and Ireland<\/strong> will be characterized by negative net emissions<\/strong> after the ECB<\/strong> net purchases , or gross purchases from which to subtract the reinvestments by deadlines. This phenomenon could last for two years, in light of the strong incidence of repayments which could remain high given the undeniable importance of issues on short maturities. Many experts tend to wait for two important phenomena<\/strong> :<\/p>\n\n\n\n