Bloomberg News

Germany Gets Bids for 103% of Bonds Offered at Auction

January 04, 2012

(Updates with previous auction details in third paragraph, analyst comment in fourth paragraph.)

Jan. 4 (Bloomberg) -- Germany got bids for 5.14 billion euros ($6.69 billion) of bunds, exceeding the maximum target at a 10-year sale for the first time in three auctions, the Bundesbank said in a statement today.

The debt agency accepted bids for 4.06 billion euros of the 2 percent securities maturing in January 2022, out of a possible 5 billion euros on offer. The average yield was 1.93 percent and the weighted average price was 100.67 according to the statement.

On the previous two occasions that Germany auctioned 10- year debt, the nation failed to receive bids for the maximum amount on offer. At a sale of the 2022 bonds on Nov. 23, participants in the auction submitted bids for 64.8 percent of the target. The securities that day were sold at an average yield of 1.98 percent. Benchmark 10-year yields reached a record low 1.636 percent on Sept. 23.

“Today’s auction was not as bad as in late November but it clearly shows that dealers are very cautious in extending their long position in the super-rich German 10-year segment,” Annalisa Piazza, an economist at Newedge Group in London, wrote in an e-mailed note. Total bids were “just a touch higher than the total amount on tap.”

The 10-year bund pared a decline in the secondary market after the auction, leaving the yield little changed at 1.90 percent at 11:41 a.m. London time. The euro dropped 0.5 percent to $1.32984.

--Editors: Matthew Brown, Nicholas Reynolds

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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