German Debt Sale Attracts Strong Demand

" /> 01/11/2012 08:05

Demand for German debt remains strong amid lingering concerns over the Eurozone sovereign debt crisis, the results of an auction indicated Wednesday.

An auction of a new line of 5-year German federal notes today saw strong demand, just days after the country sold its 6-month treasury bills at negative yield for the first time.

Germany sold EUR 3.153 billion of 5-year federal notes, known as Bobls, at an average yield of 0.90 percent, Bundesbank said. The yield was less than the 1.11 percent seen in an auction of 2016 notes on December 7.

Today's debt sale with a target of EUR 4 billion attracted bids totaling EUR 8.967 billion. The bid-to-cover ratio was 2.8 compared to 2.1 in the December auction.

The amount set aside for secondary market operations was EUR 846.70 million, implying a retention rate of 21.17 percent. The rate was 18.2 percent in the previous sale. These new notes carrying a coupon rate of 0.75 percent will mature on February 24, 2017.

Investors are increasingly flocking to the perceived safety of German securities, shunning the debt instruments of troubled Eurozone sovereigns. The country sold EUR 3.9 billion of its 6-month treasury bills at a yield of -0.0122 percent on Monday. The short-term paper was placed at a negative yield for the first time.

In contrast, France saw its 10-year borrowing costs rise at a sale last week. Focus now turns to the troubled Spain and Italy, who are set to hold debt auctions in the next two days.

The Spanish Treasury is set to sell a series of bonds maturing in 2015 and another two maturing in 2016 on Thursday. The agency aims to raise between EUR 4 billion and 5 billion from the sale. Italy is planning to sell EUR 8.5 billion 12-month treasury bills and EUR 3.5 billion 136-day paper tomorrow.

The Italian Treasury will also offer 6 percent November 2014 bonds on Friday. The nation plans to raise between EUR 2 billion and EUR 3 billion from the auction.

Meanwhile, the biggest Eurozone economy has not been immune to the impact of the crisis and the global slowdown. Official figures released earlier today showed that the German economy grew 3 percent last year, slower than the 3.7 percent expansion in 2010.

The economy grew for the second year in a row, following a 5.1 percent contraction in 2009 amid the global financial crisis. That said, the latest annual figures suggested that the German economy shrunk nearly 0.25 percent in the final three months of 2011.

Demand for German debt remains strong amid lingering concerns over the Eurozone sovereign debt crisis. An auction of a new 5-year German federal notes with a target of EUR 4 billion on Wednesday attracted bids totaling EUR 8.967 billion. On Monday, the country placed its 6-month bills at a negative yield for the first time. In contrast, France saw its 10-year borrowing costs rise last week. Focus now turns to the troubled Spain and Italy, who are set to hold debt auctions in the next two days. (Market News Provided by RTTNews) Post Comment Email(required) Password (required) Comment (required)
(Characters left: 3000) History 01/11/2012 German 5-year Debt Auction Sees Strong Demand 01/11/2012 Greek Inflation Slows To 4-Month Low 01/11/2012 UK Visible Trade Deficit Widens More Than Expected, Exports Fall 01/11/2012 Portuguese Inflation Eases In December 01/11/2012 UK Trade Deficit Rises More Than Expected Show All News Show Latest News TOP 100 INVESTING SITESTOP 100 STOCK INVESTING SITESTOP 100 FINANCIAL SITESTOP 100 FOREX SITES Subscribe Live News Subscribe Analytics Trading terms

FXOpen provides the same trading opportunities to individuals and private companies that have been traditionally only offered to large financial institutions.

Check our trading terms Click here Privacy Terms AML Home Forex Live Market News Forum Contact Us Callback request About Us Forex Terminal Metatrader 4 Trading terms ECN/STP Deposit / Withdrawal Forex Education Forex Analytics Economic Calendar Live Market News Promotions Partnership Contact Us Forum 2005-2012 © FXOpen
All rights reserved. Trading on the Forex market involves substantial risks, including complete possible loss of funds and other losses and is not suitable for all members. Clients should make an independent judgment as to whether trading is appropriate for them in the light of their financial condition, investment experience, risk tolerance and other factors.
FXOpen does not provide services for United States residents. AutoGraf 4: Video Follow Us on Follow Us on