Germany sold bonds @ 0 % interest.....May 25th, 2012
"In these uncertain times, people are more concerned about the return of capital rather than the return on capital."
10 Jan, 2012
FRANKFURT: Germany paid a negative return to investors at a debt auction for the first time on Monday, highlighting the status of Europe's biggest economy as a safe haven in the current debt crisis. The Bundesbank, which handles German federal debt auctions, sold 3.9 billion ($5 billion) of six-month Treasury bills at an average yield - the return earned by the investor - of minus 0.0122%. Negative yields effectively mean that investors are willing to pay the German government to take their money, rather than more normally earn a return.
Unlike most longer-dated bonds, treasury bills do not pay interest by way of a coupon but are usually issued at a discount price and then redeemed at par. That means investors pay slightly below the par value and receive the full face value back six months later, pocketing the difference as interest.
But this time, investors paid more than they would receive when the bills mature - the weighted average price was 100.00616 to receive 100 in six months' time.
There was strong demand for the issue, with investors submitting a total 7.08 billion in bids for the 4 billion in bonds on offer.
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