DH Latest NewsDH NEWSWest BengalLatest NewsNEWSInternational

Germany needs billions to tackle its energy crisis, but investors are avoiding its bonds

Germany, who is regarded as Europe’s most dependable debtor, is having difficulty selling its bonds at the same time as it needs billions to address the energy problem.


Recent lacklustre auctions have highlighted the difficulties of issuing debt in markets plagued by uncertainty about interest rates and state spending, making it more difficult for Germany—typically a reluctant spender—to finance its 200 billion euro ($201.40 billion) plan to reduce domestic energy costs.


German 5-year government bond demand was moderate on Tuesday, but previous recent auctions have been ‘very, very, very bad,’ according to Commerzbank’s director of rates strategy, Michael Leister, who compared the situation to a ‘buyers’ strike.’


For instance, this month, the German finance ministry sold only 1.78 billion euros ($1.77 billion) of a new 2029 bond, with total bids covering less than half of the 4-billion euro target.


According to a Reuters examination of financial agency data, the 0.47 bid-to-offer ratio during the sale was the lowest of any 7-year German bond sale and the second lowest of any of its auctions going back to 1999. Germany held 55% of the issue, the second-highest percentage ever, on its own books.


Bid-to-offer ratios at 2-, 7-, and 15-year note auctions have also fallen significantly over the past year, while additional Refinitiv IFR data reveals that Germany ultimately allocated a third of a recent weak 30-year syndicated bond sale to hedge funds, a very high amount for a government sale.


Post Your Comments

Back to top button