Greece's private creditors have until Thursday night to say whether they will participate in the exchange that is a key part of a bailout programme to enable Greece to meet a debt repayment on March 20.

The risk that voluntary participation in the deal is too low even to allow the use of collective action clauses to corral the remainder of bondholders is likely to ensure Bunds don't fall too far and may even mark new highs.

"People are nervous and the way Bunds are trading - very well - it looks like people are long of risk but not long of Bunds so it's most likely more buying on dips," a trader said.

March Bund futures, which expire on Thursday, were 11 ticks lower at 140.16 having hit a record high of 140.48 on Wednesday, with the June contract at 138.45.

Ten-year cash yields were 1.5 basis points higher at 1.795 percent.

Germany will sell 4.0 billion euros of 5-year bonds, with the auction expected to see good demand given the safe-haven status of the paper and abundant liquidity in the banking system.

"The last Bund auction saw a transition from blow-out demand to merely good," Credit Agricole strategists said.

"The auction today should be reasonably bid, on the back of (the) liquidity and the issue in question is no longer expensive."