Bund jumps to all-time high after German debt auction

Date: Wednesday 09 May 2012

The German Bund futures contract continues to set all-time highs and is now priced at 142.86 after a positive five-year debt auction that saw record-low borrowing rates.

The German Treasury issued five-year debt for €4.032bn. Demand was lower than in the prior auction but the interest rate reached an all-time low of 0.56%, down from 0.8% at the last five-year bond issuance.

Due to these extra-low yields, the Treasury was unable to shift the full €5bn that was on offer.

The German debt market is benefiting from the negative sentiment towards peripheral European debt as a result of Spain's financial sector and Greece's political problems. Spain's risk premium rose to 450 basis points.

SB

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