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Demand picks up at German bund sale

01-05-2012 11:15 BJT

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Germany has kicked off bond issuance for the new year, with the successful auction of its 10-year benchmark bund. The Bundesbank sold four billion euros of the two percent, January 2022 paper. Massive reinvestment flows spurred investors towards the auction, despite the expensive level of the paper.

Demand was notably better than at the bond’s launch in November last year. The latest auction received bids worth 1.3 times the amount allotted to investors, compared with 1.1. percent at the previous sale. The average yield came in at 1.93 percent, from 1.98 percent at the November 23rd auction.

The auction was closely watched for signs of weakness following the disappointing first auction, when the paper remained heavily under-subscribed.

The November outcome fanned fears the debt crisis was tainting the quality of even German credit. The decline in German yields since, suggests such fears may have been overblown.

Analysts say, the latest auction was better, but still shows dealers are being very cautious in going long.



Editor:Zhang Rui |Source: CNTV.CN

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