Germany is exploring innovative approaches to attract private investment into critical infrastructure and defense projects, with a proposal for state-backed credit guarantees gaining traction. Paul Achleitner, former Chairman of the Supervisory Board of Deutsche Bank, has advocated for this mechanism in a recent commentary for the Handelsblatt.
Achleitner’s suggestion builds upon Germany’s existing Hermesdeckungen system, a well-established framework already used to insure export transactions. He posits that mirroring this system could significantly reduce the perceived risk for private investors, encouraging participation in the substantial investments now deemed necessary.
The move comes following a recent parliamentary decision to relax Germany’s debt brake, which Achleitner notes has already sparked considerable interest from international investors. He specifically highlights the potential benefits for Germany’s Mittelstand, or small and medium-sized enterprises, which often struggle to access favorable financing options. While large defense contractors typically secure funding without issue, many smaller suppliers, particularly those needing capital for rapid production expansion, face barriers.
The proposed system would offer broad risk diversification across numerous projects, mirroring the Hermesdeckungen’s track record where losses generally constitute less than 1.5% of the total state guarantees. Achleitner, who currently advises HPS, a credit management firm associated with Blackrock, argues that this proven principle is well-suited for deployment across the nation’s urgent infrastructure and defense needs.