“The issue aims to obtain more than €1billion,” the spokeswoman told news agency AFP after a Commerzbank statement announced the operation. A consortium of banks charged with selling the three-year bonds includes Dresdner Bank, which is being bought by Commerzbank, the French bank BNP Paribas, and four state-owned regional German banks.

The funds raised are meant to give Commerzbank “more room to manoeuvre in its credit activities,” the statement said. The bond issue, guaranteed by the federal government’s financial market stabilization fund, or SoFFin, is expected to be followed by other state-backed issues by German state-owned regional banks.

State guarantees for the bonds allow Commerzbank to obtain a better rating from international agencies and thus be more credible in the eyes of investors. Banks have begun to tap the bond market because interbank lending is still blocked by fears over the creditworthiness of those which seek to borrow funds.

Commerzbank might also ask Berlin for a second cash injection under the government’s banking sector rescue package, a press report said earlier on Thursday.

The bank could seek up to €4 billion in fresh funds, according to UBS analysts quoted by the Financial Times Deutschland.

Early in November, Commerzbank obtained €8.2 billion in cash from the government and 15 billion in state loan guarantees under a German plan to bail out the banking sector.

German media also said this week that Commerzbank and the insurance group Allianz might seek SoFFin funds or loan guarantees for Dresdner Bank, a German bank being sold by Allianz to Commerzbank and which was hit especially hard by the international financial crisis.

Commerzbank has said it wants to wrap up the purchase of Dresdner Bank, estimated to be worth 5.1 billion euros, by the end of this month. The bank, the insurance group and SoFFin officials declined to comment on that report when contacted by AFP.