German bund sale 'worst in recent memory'

Fears over the European debt crisis have escalated as a €6bn German bund auction fell flat today, showing investors are now demanding even higher compensation from an asset class previously seen as a safe haven.

The bid-to-cover level for the auction on ten year bunds was only 1.07, which indicated slowing demand, as this has been falling steadily since August when levels reached 1.44. The German government was able to sell only €3.644bn ($4.92bn) of the €6bn in 10-year bunds on auction for an average yield of 1.98%. Observers said the result was the worst in recent memory for a German government bond sale. The euro fell below 1.34 against the dollar on the news. "If you wanted a further signal that the sovereign debt crisis is worsening, this would be it," said Andy Scott, foreign exchange d...