Frankfurt: The European debt crisis appeared to escalate after a failed German government bond auction on Wednesday, indicating that investors are now demanding higher risk compensation even at the heart of the currency bloc’s debt market.
German government bonds, or bunds, carry low yields, but are deemed the safest haven in the euro zone bond market. Germany has fallen short of a targeted bond sale before because of its super-low yields, but that size of shortfall was stunning in a market already rapidly losing confidence in European Union proposals to contain the debt crisis. A German finance agency spokesman said the auction reflected a nervous market, but the “result doesn’t mean any refinancing bottleneck for the budget”.
Click here to read full version of this story.
—The Wall Street Journal