Germany Is Getting Paid Less to Borrow Just as Virus Costs Build

Bookmark

Germany’s borrowing costs have risen to the highest since January last year as the government mulls additional spending of 50 billion euros ($61 billion) to fight the fallout from the pandemic.

The nation is getting paid less to raise funds -- a quirk of negative yields -- after rates on benchmark 10-year debt rose to an eight-month high this week, as the market bets on global reflation lifted bond yields.

Germany Is Getting Paid Less to Borrow Just as Virus Costs Build

The nation sold 3.32 billion euros of 10-year debt at an average yield of minus 0.32%. Wednesday’s auction comes hot on the heels of the first positive-yielding sale in almost a year of 30-year debt the previous week in a sign of mounting borrowing costs. Compounding matters, the oversubscription rate fell to 1.55 times, the lowest since March.

German bonds stayed higher after the auction, with the yield on 10-year debt down one basis point at minus 0.32%.

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.