German Federal Bonds (Bunds): A Complete Guide for 2026

Frankfurt, 23 January 2026 – German Federal Bonds, known as “Bunds,” form the cornerstone of the country’s debt capital market and serve as the primary benchmark for the entire Eurozone. As the Federal Republic of Germany prepares for a record year of issuance, understanding the structure, trading, and significance of these securities is essential for investors, policymakers, and financial professionals.

The Role of Bunds in German Finance

Federal Bonds (Bunds) are the most important long-term financing instruments for the German government. Their issuance and trading are managed by the German Finance Agency (Deutsche Finanzagentur), which acts on behalf of the Federal Ministry of Finance. In both the primary and secondary markets, Bunds account for roughly half of all trading volume in German government securities.

In 2025, the total outstanding volume of 7-, 10-, 15-, and 30-year Federal bonds reached €1,311.5 billion, representing approximately 66% of the federal government’s debt portfolio. The 10-year Bund alone accounted for around 34% of this total.

Planned Issuance for 2026: Key Facts

Current Benchmark Issues (as of 23 January 2026)

The German Finance Agency maintains a suite of “on-the-run” benchmark bonds across the maturity spectrum. These are the most recently issued and highly liquid securities that serve as reference points for the yield curve.

Secondary Market Trading and Liquidity

In 2024, trading in Federal bonds (Bunds) accounted for more than half of the total trading volume of all Federal securities. The flagship 10-year Federal bond saw a turnover of €2,474 billion, representing 37% of the total. The 7-year maturity accounted for €260 billion (4%), the 15-year for €196 billion (3%), and the 30-year for €641 billion (10%).

According to a Bundesbank technical paper, the German and Italian government bond markets differ significantly in structure. While Italian government bonds are primarily traded via a regulated electronic platform, German Bunds are mostly traded bilaterally (over-the-counter). Furthermore, German government bonds are mainly held by foreign investors and euro area investment funds, whereas Italian bonds are held domestically.

Investor Base and Market Structure

As of the end of 2025, foreign investors held approximately 77% of German government bonds, with China being the largest foreign holder, followed by the United States and the United Kingdom. Non-bank financial institutions (NBFIs) located in the euro area (excluding Germany) held approximately 20% of the bonds, with half of these held by investment funds.

Frequently Asked Questions

What is the difference between a Bund, a Bobl, and a Schatz?

These are the conventional names for German Federal Government securities with different original maturities. A Bund (Federal bond) has an original maturity of 10, 15, 20, or 30 years. A Bobl (Federal note) has an original maturity of 5 years. A Schatz (Federal Treasury note) has an original maturity of 2 years.

Why are Bund yields considered the “risk-free rate” for the Eurozone?

German government bonds are perceived as having virtually no credit risk due to the country’s strong economy, political stability, and low debt-to-GDP ratio. Consequently, their yields serve as the baseline interest rate upon which all other euro-denominated debt instruments are priced. This makes them the de facto “risk-free” benchmark for the single currency area.

How does the “stripping” of Bunds work?

The separation of a bond into its capital and individual interest claims, known as “stripping,” was introduced for 10- and 30-year Federal bonds in 1997. Bonds issued from 2020 with 7- and 15-year maturities are also strippable in principle. However, separation is only possible if the bonds have a coupon greater than zero.

Both “strips” can then be traded separately (from a minimum nominal amount of €50,000, with a minimum denomination of €0.01). The separation is carried out for the holder of a bond by the respective custodian bank. The reconstruction of a bond from interest and principal strips is also possible, but is reserved for credit institutions for their own holdings.

What are the main risks of investing in Bunds?

The primary risks are interest rate risk, inflation risk, and, to a far lesser extent, credit risk. While German government bonds are considered extremely safe, they are not entirely risk-free. Interest rate risk refers to the possibility that changes in market interest rates will affect the price of the bond. Inflation risk is the potential that rising consumer prices will erode the purchasing power of the bond’s future payments.