Tags: Germany | Negative | Yield | Auction

Germany Gets Negative Yield for First Time in Auction

Monday, 09 Jan 2012 09:57 AM

Germany sold six-month treasury bills at a negative yield for the first time amid demand for the debt securities of Europe’s largest economy as a haven from the sovereign debt crisis in neighboring nations.

The government auctioned 3.9 billion euros ($4.98 billion) of securities maturing in July at an average yield of minus 0.01 percent, the Federal Finance Agency said in an e-mailed statement today. It was the first time it sold the securities at a negative yield, Joerg Mueller, a spokesman in Frankfurt, said in a telephone interview. The Netherlands sold securities due in March at a yield of zero on Jan. 3.

“For the German taxpayer, this is obviously good news,” said David Schnautz, a fixed-income strategist at Commerzbank AG in London. “There are investors out there who really worry about the return of their money. That’s why they are OK donating to Germany some of their money just to make sure they get it back. It just underpins how nervous the overall market is.”

The sale drew bids that were nearly double the amount allotted. Some 25 of the Federal Finance Agency’s 39-member auction group participated in the bidding, the debt agency said in an e-mail today. The bid-to-cover ratio was 1.8, it said.

German Chancellor Angela Merkel and French President Nicolas Sarkozy plan to drive forward their agenda for stricter budget rules as they seek to craft a master plan for rescuing the euro over the next three months. The two leaders have sponsored a plan to draw up new fiscal guidelines by March to resolve a crisis that began in Greece more than two years ago.

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