What is Bubill?
The Bubill is Germany's money market instrument — a zero-coupon treasury bill used for short-term government financing. It's how Germany manages liquidity between regular bond auctions.
A Bubill (Unverzinsliche Schatzanweisung) is a German government discount paper with maturities of 3 to 12 months. Bubills pay no coupons — instead, they're issued below face value and redeemed at par, with the discount representing the investor's return.
Key Characteristics
Bubills are zero-coupon instruments issued at a discount to face value. Maturities range from 3 to 12 months. They're auctioned weekly by the Deutsche Finanzagentur and settled through Clearstream. Minimum denomination is €0.01.
How Bubill Pricing Works
Instead of paying coupons, Bubills are sold below face value. Example: A 6-month Bubill might sell at €99.00 and redeem at €100.00. The €1.00 difference is your return — equivalent to about 2% annualized. This makes Bubills functionally similar to US T-Bills.
Investment Use Cases
Bubills are used for: ultra-short-term cash management, repo collateral, liquidity buffers, and as a risk-free benchmark for money market rates. Banks and institutional investors are the primary buyers; retail access is limited but possible.
Bubill vs. Schatz
| Aspect | Bubill | Schatz |
|---|---|---|
| Maturity | 3-12 months | 2 years |
| Coupon | None (zero coupon) | Fixed annual coupon |
| Pricing | Issued at discount | Issued near par |
| Return mechanism | Price appreciation | Coupon + price change |
| Market segment | Money market | Capital market |
Practical Example: Bubill Return Calculation
You buy a 6-month Bubill at 98.75 (discount price). Face value: €100,000. You pay €98,750. After 6 months, you receive €100,000. Return: €1,250 on €98,750 = 1.27% for 6 months ≈ 2.54% annualized. No coupon payments — your entire return comes from the price discount.
Frequently Asked Questions
What is a Bubill in simple terms?
A Bubill is a short-term German government security (3-12 months) that pays no interest. Instead, you buy it at a discount and receive face value at maturity — the difference is your return.
Why would I buy a zero-coupon Bubill?
Bubills offer German government safety for very short time horizons. They're useful when you need to park cash for a few months with zero credit risk and predictable returns.
What does 'unverzinslich' mean?
'Unverzinslich' means 'non-interest-bearing' in German. Bubills don't pay periodic interest — your return comes entirely from the discount at purchase.
Can private investors buy Bubills?
Yes, but it's less common. Bubills are primarily an institutional instrument. Retail investors can access them through the Bundeswertpapiere portal or brokers, but minimum trade sizes may apply.
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