Germany this morning raised its plans for third-quarter debt issuance in a move analysts saw as highlighting the weakness of Europe's largest economy and its large budget deficit.
The German Finance Agency, Finanzagentur, said it plans to issue €56 billion of debt in July-September, €7 billion more than scheduled in its 2003 issuance calendar.
Germany, Europe's biggest economy, is in a technical recession and its budget deficit is expected to breach the euro zone's 3 per cent limit for a third consecutive year in 2004.
Borrowing money on financial markets is one way of bringing down a deficit, especially when tax revenues are weak.
Germany said in December that gross debt issuance this year would total €208 billion ($228.4 billion).
Expectations of increased supply have undermined German government bonds for over a year, narrowing yield spreads between German debt and euro zone counterparts.
Germany's third quarter issuance schedule was revised to include a €4 billion top-up of its 30-year, 4.75 per cent bond on July 23rd.