FRANKFURT: Germany paid the lowest rate in its history to borrow money for five years, data showed Wednesday, as investors continued to flock to the safety of Europe's top economy amid new market tensions.
Germany paid an average rate of 0.41 percent at an auction of five-year bonds, or Bobls, down from 0.56 percent previously, said its central bank, which organised the sale.
A year ago, the yield was more than 2.0 percent.
Demand was solid, with investors bidding for 6.221 billion euros' ($7.77 billion) worth of bonds, while only 3.977 billion euros were on offer.
The Bundesbank said it retained 1.02 billion euros' worth of bonds for market-tending purposes, as per its usual practice.
"Today's good results for the five-year German auction clearly show that market dealers remain in a very cautious mode" ahead of the European Central Bank's policy meeting later on Wednesday, said Newedge Strategy analyst Annalisa Piazza.
The results of the five-year auction showed that investors still looking for "safe-haven paper," she said.
"Markets are still pricing in risks of a euro break-up and the auction is a clear sign that dealers are still worried about it," she said.
All eyes were on the ECB to see if it will decide to come to the rescue once again as the eurozone debt crisis deepens.
While the majority of ECB watchers believe the bank could cut borrowing costs very soon from their current historic low of 1.0 percent, most analysts believe it will not act this month, preferring to keep its options open.
Comments
Comments are closed for this article.