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Investors avoid German bond auction

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  • Investors avoid German bond auction

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."

If you have any comments you would like to add to this or any other story, contact Carolyn Bandel on +44 (0)20 7261 4622 or email carolyn.bandel@ipe.com

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    Closing date: 2019-06-28.

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