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Mini yields for German bonds

January 28, 2013

For the first time in over half a year, Germany has failed to earn money by selling short-term sovereign bonds. The most recent auction has seen investors securing a yield again, albeit a tiny one.

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© Bettina Blass #26570852
Euro banknotes piled upImage: Fotolia/Bettina Blass

An auction of 12-month sovereign bonds on Monday washed almost 2.1 billion euros ($2.8 billion) into the coffers of the German Finance Ministry.

The sale was 1.8 times oversubscribed, signaling investor's continuous appetite for German bonds.

For the first time since June of last year, buyers secured a positive yield on short-term bonds, albeit a small one of 0.1319 percent, meaning that Germany stopped making gains by selling its own debt.

Confident investors

Throughout 2012, the Finance Ministry profited from the country having widely been considered as a safe haven for investors. In altogether 21 auctions of bills with a varying maturity Germany did not have to pay a single cent in terms of interest.

But now, with the eurozone debt crisis seen to be largely under control, investors have started putting some of their money in more risky bonds from Spain, Italy and other crisis-stricken euro area members. The alternatives at hand have consequently caused yields on German bills to enter positive territory again.

The Finance Ministry said it was planning to borrow some 250 billion euros from capital market players in the course of the current year - five billion euros less than last year.

hg/pfd (Reuters, dpa)