Germany easily sold just over four billion euros of 10-year government bonds in its first auction of the year.
Along with the pick-up in demand compared to the last auction in November, Berlin was able to offer lower rate of interest to investors. It dropped to 1.93 percent from 1.98 percent last time.
However attention will be more focused on France is due to sells up to 8 billion euros of bonds this week and auctions by Spain and Italy next week. They are the two countries most exposed to an escalation of the crisis.
“From a relative value perspective, the bond was expensive compared to the German curve,” said DZ Bank rate strategist Michael Leister.
“It’s not a good auction, but it’s not a surprise. For a good auction we need a pronounced flight to quality environment which we didn’t get in the past couple of days.”
Germany plans to issue 250 billion euros of debt in 2012, down from 275 billion euros in 2011, including 170 billion euros of conventional government bonds.