GERMANY - The German 10-year government bond auction, intended to raise up to €6bn, failed today after investors appeared to shun the issue.
The German central bank, the Bundesbank, said it had sold less than €4.1bn of its 3.75% securities due on January 4, 2019 at an average yield of 3.12% during this morning's tender.
While investors bid for €5.2bn of bonds, the government said in a release at the end of December it planned to sell €6bn.
David Keeble, head of fixed income strategy at Calyon in London, told IPE it was a "very poor auction" of the so called ‘Silvester' bond, the New Year bond, kick-starting the auction season.
Germany is the first in the Eurozone attempting to boost debt sales to stimulate its slowing economy and finance bank bailouts.
France may sell €7bn of bonds tomorrow, while also Spain is planning an auction.
According Keeble tomorrow's auction might have a better result than Germany's today: "You could argue it was not a good bond to sell, because everybody wants to take on a little bit more risk, and when you want to do that you don't buy German bonds, but rather you buy everything else."
He concluded: "So maybe there was a movement away from the safe haven element, so I don't think it will be quite as poor for the Spanish and the French auction."
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