Germany got bids for 6.24 billion Euros of two-year notes at an auction Wednesday exceeding its 5 billion-Euro maximum sales target, according to a statement from the Bundesbank.
The nation sold the securities due in September 2014 at an average yield of zero percent, compared with minus 0.06% at an auction of similar-dated debt on July 18. German bonds had declined on the previous two days, pushing two-year yields above zero for the first time in five weeks amid speculation European leaders are making progress in solving the region’s debt crisis.
“You could argue on a very cheeky scale that this may even be a bargain to catch it at zero,” said David Schnautz, a fixed-income strategist at Commerzbank AG in New York.
“There are a lot of hopes, but there’s also a lot of disappointment potential. For all those who still seek a very safe parking lot for their money, buying the two-year German paper at nothing is actually still a valid trade.”
The yield on the previously issued German note due in June 2014 fell one basis point, or 0.01 percentage point to minus 0.006% at trade closing. The yield climbed as high as 0.02% on Tuesday after being negative since July 12.
A negative yield means investors who hold the security until it matures will receive less than they paid to buy it.
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What even is a 0% bond? 0% of anything is nothing but I can't believe they're wanting to get nothing back!Aug 23rd, 2012 - 12:07 pm 0
better no gain but secured money, than losing EVERYTHING while buying argentine bonds. That's probably the thought of the investors.Aug 23rd, 2012 - 10:00 pm 0
Germany says thank you to Argentina for granting them these conditions. The reward for trustful, due-fullfilling and responsable governments. Simply said, something that goes beyond your Kirchnerist world... its only consequent that you can't believe it.
0% extra return is perhaps believable, I read the article quickly and imagined that to multiply anything by 0% is to wipe it out entirely and rather obtusely made the point that can't be what they're talking about!Aug 24th, 2012 - 12:56 am 0