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Borrowing costs fall to record low as Germany sells 5-year debt

Economic IndicatorsJun 06, 2012 05:44AM ET
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Investing.com - Germany saw borrowing costs fall to a record low at an auction of five-year government bonds on Wednesday, just hours ahead of a policy-setting meeting by the European Central Bank.

Germany’s Treasury sold EUR3.978 billion in five-year government bonds maturing in September 2017 at an average yield of 0.41% earlier in the day, the lowest yield on record and down from 0.56% at a similar auction last month.

Demand was lackluster, with bids exceeding supply 1.6 times. The country planned to sell EUR5 billion in five-year debt.

Bond auctions have become key drivers of risk sentiment in recent months, as traders attempt to gauge the ability of indebted euro zone nations to fund themselves.

Following the auction, the euro remained higher against the U.S. dollar, with EUR/USD adding 0.48% to trade at 1.2511.

Meanwhile, European stock markets were sharply higher. The EURO STOXX 50 surged 2.15%, France’s CAC 40 rallied 2.1%, Germany's DAX shot up 1.7%, while London’s FTSE 100 jumped 1.4%.

Borrowing costs fall to record low as Germany sells 5-year debt
 

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