New inflation-linked German Bund available on Eurex Repo
Eurex Repo will be making the new inflation-linked German Bund available for repo trading as soon as it is issued.
The Federal Ministry of Finance announced on Tuesday that it was to issue the first 10-year inflation-protected bond in the week commencing 6 March 2006. The bond will be traded on the Eurex Repo's euro market, which Eurex Repo operates in addition to its Swiss franc repo market. The new bond will also be launched on the Eurex Bonds international fixed-income trading platform at the same time.
The 10-year inflation-indexed German Bund is a bond with a cash flow that is linked to the performance of an inflation index. The original nominal value of the inflation-linked bond is adjusted on a daily basis to reflect inflationary developments, thus protecting the value of the bond from changes in inflation.
The European repo market is a growth market. According to industry surveys performed by the International Capital Market Association (ICMA), the European repo market grew by an average of 25% annually between 2002 and 2005.
Eurex Repo has substantially outperformed the market: the average outstanding volume of Eurex Repo's two repo markets increased by 40% year-on-year to total EUR 73.9 billion.
The euro repo market is proving to be a particularly high-growth area. For the first time at the end of 2005, its outstanding trading volume outstripped that of the Swiss franc market, which was launched two years previously, reaching almost EUR 50 billion at its peak.
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