Bloomberg News

Germany Fails to Get Bids for 35% of 10-Year Bonds at Auction

November 23, 2011

Nov. 23 (Bloomberg) -- Germany failed to find buyers for 35 percent of the 10-year bonds offered for sale today, sending its borrowing costs higher and the euro lower on concern that Europe’s debt crisis is driving investors away from the region.

“This auction is nothing short of a disaster for Germany,” Mark Grant, a managing director at Southwest Securities Inc. in Fort Lauderdale, Florida, said by e-mail. “If the strongest nation in Europe has this kind of difficulty raising capital one shudders concerning the upcoming auctions in other European nations.”

The yield on the 30-year German bond climbed to a two-week high. Total bids at the auction of securities due in January 2022 amounted to 3.889 billion euros ($5.21 billion), out of a maximum target for the sale of 6 billion euros, according to Bundesbank data. The securities were sold at a yield of 1.98 percent. French and Belgian bonds fell for a third day after De Standaard newspaper said Belgium is seeking to renegotiate the break-up plan for lender Dexia SA.

The yield on 2.25 percent securities maturing in September 2021 climbed four basis points to 1.96 percent at 11:32 a.m. in London. The price of the bonds slid 0.39, or 3.90 euros per 1,000-euro face amount, to 102.530. Ten-year Treasury yields were at 1.93 percent.

The rate on 30-year debt climbed as much as seven basis points to 2.68 percent, the highest since Nov. 9.

The yield on 10-year French debt increased 10 basis points to 3.63 percent, while the rate on similar-maturity Belgian securities was 13 basis points higher at 5.21 percent.

The euro weakened 0.9 percent to $1.3387.

--Editors: Daniel Tilles, Mark Gilbert

To contact the reporter on this story: Paul Dobson in London at pdobson2@bloomberg.net

To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net


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