What is Bobl?
The Bobl is Germany's 5-year government security — the sweet spot between short-term safety and longer-term yield. With €270 billion outstanding, it represents about 14% of all German federal securities.
A Bobl (Bundesobligation) is a medium-term German federal note with a 5-year maturity. Bobls occupy the middle of the German government yield curve, bridging the gap between short-term Schatze and long-term Bunds.
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Key Characteristics
Bobls are issued with 5-year maturities and fixed annual coupons. Like all German federal securities, they're backed by Germany's AAA credit rating and are highly liquid. They trade in minimum denominations of €0.01.
Position in the Yield Curve
Bobls sit in the middle of the yield curve — between 2-year Schatze and 10-year Bunds. This middle position makes them useful for investors who want moderate duration risk while still benefiting from government backing.
Bobl Futures
The Bobl future is traded on Eurex with a notional value of €100,000. It's one of the most liquid interest rate futures in Europe, used by institutional investors to hedge medium-term interest rate exposure or speculate on yield curve movements.
Bobl vs. Other German Securities
| Aspect | Schatz (2Y) | Bobl (5Y) | Bund (10Y) |
|---|---|---|---|
| Duration | ~1.9 years | ~4.5 years | ~8.5 years |
| Interest rate risk | Low | Medium | High |
| Yield (typical) | Lowest | Middle | Highest |
| Price volatility | Low | Medium | High |
Practical Example: Using Bobls for Medium-Term Investing
You have €50,000 to invest for 5 years. You buy Bobl 2.2% 2029 at par (100). Each year you receive €1,100 in interest. If rates rise by 1%, your Bobl's price drops by roughly 4.5% (duration effect) to about €95.50. But if you hold to maturity, you still receive €50,000 back regardless of price fluctuations.
Frequently Asked Questions
What is a Bobl in simple terms?
A Bobl is a 5-year German government bond. It's the middle option between short-term (2-year) and long-term (10-year) German securities — offering moderate yield with moderate interest rate risk.
Why choose Bobls over Bunds?
Bobls have lower duration, meaning less price volatility when interest rates change. If you're worried about rising rates, Bobls lose less value than Bunds. The tradeoff: Bobls typically yield less than longer-dated Bunds.
What does 'Bobl' mean?
Bobl is the market nickname derived from 'Bundesobligation' — literally 'federal obligation' in German. It's universally used by traders and investors instead of the full name.
How are Bobls different from corporate bonds?
Bobls are government bonds backed by Germany's taxing power and AAA rating — virtually no credit risk. Corporate 5-year bonds typically yield more but carry default risk depending on the company's creditworthiness.
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