Wednesday, November 23, 2011

German bond auction a disaster, new world debt markets freeze?!

What could be worse than sub-prime mortgage global meltdown? Sovereign debt meltdown, in the country you least expected.
German 10-year bond auction a "disaster"
A "disastrous" sale of German benchmark bonds sparked fears on Wednesday the debt crisis was beginning to threaten even Berlin, with the Bundesbank forced to dig deep into its pockets to ensure the auction did not fail.

In one of the least successful debt sales by Europe's powerhouse economy since the launch of the single currency, the low returns offered -- just 2 percent annually over 10 years -- deterred investors made uneasy by the escalating cost of the crisis to Germany.

That meant the central bank had to pick up 39 percent of the 6 billion euros ($8 billion) of debt Germany had hoped to sell after commercial banks bought just 3.644 billion euros of the issue.

"It is a complete and utter disaster," said Marc Ostwald, strategist at Monument Securities in London.

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