German sees rising government borrowing costs

Germany's Finance Ministry expects government borrowing costs to rise next year, Der Spiegel magazine reported on Saturday. Yields on German 10-year bonds, the euro zone benchmark, hit a record low of 0.05 percent in April, pinned down by the European Central Bank's near-zero interest rates and its bond-purchase programme. Although yields have begun rising since April, the government is still able to issue 10-year bonds at 1 percent.
However, Spiegel quoted Finance Ministry officials as writing in an internal paper that "at the moment, it cannot be ruled out that adjustments in interest rate costs will be necessary in the 2016 federal budget". It was to be expected "that the favourable financing from the low interest rate phase will gradually expire and will then have to be followed up with financing at unfavourable conditions," the officials added in the paper.