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Europe
Germany 10 Year Bond Auction Fails
2008-11-17
For any government looking to raise money in the capital markets in the next few months, there was an ­ominous development in Germany this week.

A German 10-year bond auction failed -- something more or less unheard of until this year -- as cash-strapped banks and investors snubbed the government offering.

It is a clear sign of straitened times when a benchmark bond in one of the most liquid markets in the world cannot attract enough bids to reach its target amount. Crucially, it raises serious doubts about whether governments can raise the vast amounts of debt needed to fund fiscal stimulus packages and bank recapitalisations in the current tough market conditions.

Any sign of waning demand may force up bond yields -- putting further pressure on public finances when they are already under strain. Nowhere is the issue more pressing than in the US.
Posted by:Anonymoose

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