Arab Today, arab today lack of bids mars german bond launch
Last Updated : GMT 03:27:34
Arab Today, arab today
Arab Today, arab today

Lack of bids mars German bond launch

Arab Today, arab today

Arab Today, arab today Lack of bids mars German bond launch

London - Arabstoday

Germany failed to attract enough bids to cover the targeted €3 billion (Dh14.6 billion) launch of its new ultra-long bond yesterday, as investors baulked at the record low returns on offer. The auction drew bids worth €2.747 billion, falling short of the targeted amount and making the result a ‘technical fail\'. The weak outcome mirrors that seen on April 11 when Germany launched a ten-year bond, and underscores that surging demand for the safety of the country\'s bonds has driven investment returns so low that some are reluctant to buy at current levels. \"It\'s a stern reminder that you drive yields down too low and basically the interest isn\'t going to be there,\" said Marc Ostwald, strategist at Monument Securities in London. A total of €2.41 billion worth of bids were accepted at an average yield of 2.41 per cent, leaving German authorities to retain a slightly higher-than-usual 20 per cent of the issue for sale into secondary markets at a later date. That compares with an auction yield of 2.62 per cent at the most recent sale of a German ultra-long bond in January, when 18.1 per cent was retained. Volatile market Germany\'s debt agency said the result reflected a \"very volatile and uncertain market environment\" in a statement released after the auction. The new 2044 bond carries a 2.5 per cent coupon, the lowest-ever on a German ultra-long bond. While the auction result appears weak, the sale still shows Germany is able to borrow at extremely low cost and for a long period of time compared to other Eurozone countries. From: Gulfnews

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