Germany saw enhanced demand for its zero-interest bearing two-year debt at an auction on Wednesday despite a slight increase in the cost.
The country raised EUR 4.005 billion of its zero-coupon Federal Treasury note due June 2014 against the EUR 5 billion target set for the sale, Bundesbank said. The debt, which was first sold in May, attracted bids totaling EUR 7.595 billion.
The yield on the 2-year debt rose to 0.10 percent from 0.07 percent in May. The bid-to-cover ratio, which indicates demand, climbed to 1.9 from 1.7 as investors sought a safe haven given the worsening situation in Spain and the worrying prospects for Italy.
The amount set aside for secondary market purposes was EUR 995 million, which is 19.9 percent of the offer. This compares to the 8.9 percent retention rate in the May sale.
Amid rising worries that Spain may lose access to the financial market, clearing house LCH Clearnet raised the margin for trading in the country's bonds, yesterday. The margin is the extra amount that clients must keep in their account. The margin charged on 10-15 year Spanish debt was hiked to 14.7 percent from 13.6 per cent.
by RTT Staff Writer
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