- CNTV English - CCTV News

Homepage > News > Biz >

Weak German bonds sale fuels Europe debt crisis fears

11-24-2011 15:51 BJT

BERLIN, Nov. 24 (Xinhua) -- Germany failed to sell more than a third of an issue of 10-year bonds Wednesday, increasing worries about the European debt crisis.

Investors only took 3.9 billion euros (5.2 billion U.S. dollars) of the total offer of 6 billion euros (8 billion dollars) in German bonds, normally considered a safe haven for investments.

The weak market response further fueled concern the debt crisis is spreading to Europe's core economies after France saw a sharp rise in its borrowing costs last week.

"I've never experienced Germany being unable to place such a high percentage of its bonds at auction," media quoted Rudolph Hessler of HSBC Trinkaus bank as saying.

Germany's federal finance agency, however, played down the market performance, calling it routine and saying it was no problem.

Finance ministry officials said Germany's ability to raise funds from the market had not been affected and they were confident about selling out the remaining 2.1 billion euros at the next auction.

Europe's leading economy has rarely faced any trouble selling its bonds, commonly regarded as gold standard securities. This time, analysts attributed the below-expectation performance to low yield rates and overall weak market confidence.

Yields for the 10-year bonds were set at 1.98 percent, one of the lowest in recent history and much lower than the 3.25 percent for the last issue of German 10-year bonds.

The poor sales also added pressure on German bonds in secondary markets. The yield of 10-year German bonds climbed by a 0.2 percentage points to 2.08 percent on the same day.

The debt burden of Germany, the world's fourth largest economy, has already climbed to 81 percent of the nation's gross domestic product. Increasing borrowing costs could exert strains on fiscal policies and economic growth.

Also on Wednesday, German Chancellor Angela Merkel hit back at the European Commission's proposal to create eurobonds, saying it would not pull the eurozone out of the current debt crisis.

Speaking in a parliamentary debate, Merkel said it was "extremely worrying and inappropriate that the European Commission is changing the focus to such eurobonds" after she stressed Tuesday it was not the right time to discuss the establishment of eurobonds.

Merkel said the idea would send a signal that some member states' structural problems could be solved by borrowing more money.

Hours after Merkel's speech, European Commission President Jose Manuel Barroso unveiled a set of draft regulations aimed at laying a legal basis for tougher supervision and management of eurozone national fiscal policies.

According to Barroso, the eurobonds are "an example of reinforced governance, of a strong will to live together in the euro area, and a good example of discipline and convergence."

However, some observers said Germany still feared that, once eurobonds were issued, the country's hard-earned low borrowing costs would sharply rise, and its financial reputation would be dragged down by other overspending nations.

Editor:Wang Xiaomei |Source: Xinhua

Hot Videos view more

The celebrations are still continuing as the victorious coach, Joachim Loew, has been honored for his achievement in his hometown of Freiburg.
Germany coach Loew honored in hometown of Freiburg

Chinese men´s national team continued its preparations for next year´s Asian Cup, as they managed a one-all draw against visitors Jordan during a football friendly in Harbin, the capital city of Northeast China´s Heilongjiang Province.
China held to 1-1 draw by Jordan

The defending world champs came into the contest with a perfect 6-and-oh record, but they would be in for a tough first half before opening things up in the second.
USA beat Slovenia 119-76 in quarter-finals

Hot Stories more

UK authorities believe killer of James Foley is a British national

Across the UK the hunt is on for James Foley’s killer, who authorities believe is a British national. As Richard Bestic reports from London, Prime Minister David Cameron cut short his summer break to lead his government’s response.

Israeli war jets renews Gaza strike as truce talks stalled

Three Palestinians were killed and 40 others wounded in the intensive Israeli war jets´ airstrikes on the Gaza city on Tuesday night, shortly before an end of a 24-hour ceasefire in the Gaza Strip,

Missouri police arrest dozens after violent night

As the protests in the town of Ferguson, Missouri turned violent with police facing ´heavy gunfire´ from some ´criminal elements´, cops fired tear gas, stun grenades and arrested 31 demonstrators on Monday night.

Picture in news more

More Video News

Choose TV Program