Germany paid a record low rate to borrow for 10 years, data showed on Wednesday, as investors flocked to park cash in the benchmark bonds of Europe's top economy amid new market tensions.
Germany paid an average rate of 1.31 percent at an auction of 10-year bonds, or Bunds, down from 1.52 percent at the previous sale in June, according to the German Finance Agency, which organised the auction.
"In a still very tense market environment, the search for quality was the decisive factor" for the low rate, the agency said. Demand was solid, with investors bidding 6.391 billion euros' ($7.844 billion), while only 4.153 billion euros were allotted, with the so-called cover ratio rising to 1.5 from 1.4 in June.
The agency said it retained 847 million euros' worth of bonds for market-tending purposes, as per its usual practice. As the eurozone debt crisis shows no sign of easing, investors have scrambled to put their cash in the safe haven of German bonds. On Monday, Germany paid a negative rate on six-month bonds, meaning that investors were effectively paying to lend Berlin money.
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