Germany : 10-yr Bund yield turns negative for first time at auction

BERLIN : Germany’s 10-year government bond yield turned negative for the first time at an auction on Wednesday, fetching the lowest average real yield at auction on record for such paper at -0.05 percent, the debt office said.

The German Finance Agency, the federal government’s debt management office, sold 4.038 billion euros ($ 4.47 billion) of its new 0.00 percent, 10-year Bund at the lowest price of 100.48 with a bid-to-cover ratio of 1.2.

“It’s the first time that a 10-year Bund fetched a negative yield during an auction,” a debt office spokesman said, adding that market liquidity for Bunds was very high and that investors were attracted by Germany’s top notch credit rating.

A backdrop of unprecedented monetary stimulus from the European Central Bank and mounting political risks in Europe, including Brexit, have boosted demand for German bonds – seen as one of the safest assets in the world.