Germany mulls issue of more short-term bonds

The German Finance Ministry is considering issuing short-term bonds as part of a shake-up of its debt management and to try to reduce the cost of debt servicing, Der Spiegel magazine reported at the weekend.
A Finance Ministry spokesman said he could not confirm the report.
The magazine quoted a confidential ministry report saying that by 2007 the average duration of outstanding government debt should be cut to 5.22 years from 6.17 years currently.
The debt servicing costs, which now total 38 billion euros per year, should in the same time span be cut by 500 million euros.
It added the final new debt mix should be achieved by 2014, when a total of 45 percent of the state debt, which now amounts to about 750 billion euros, will be cut to two years or less.
The risk to the strategy is that if interest rates rise the government would be forced to pay more for debt servicing than it does now. The risk to the budget would be about 15 percent higher, the report said.