German Notes Sold at Negative Yield on Greece, U.S. Concern

Germany sold two-year notes at a negative yield for the second time on record, with the Federal Finance Agency saying the debate over Greece’s fiscal sustainability boosted demand for the securities.

The nation auctioned 4.3 billion euros ($5.5 billion) of the debt at an average yield of minus 0.02 percent, down from 0.07 percent when similar-maturity debt was offered on Oct. 17, according to a statement from the Bundesbank today. It’s the first time since July the rate has been below zero. A negative yield means investors who hold the security until it matures will receive less than they paid to buy it.

The result underlines investors’ “nervousness and search for safety amid risks that persist from Greece’s unresolved troubles and the impending fiscal cliff in the U.S.,” finance agency spokesman Joerg Mueller said in an interview after the auction. The so-called fiscal cliff refers to a combined $607 billion of tax increases and spending cuts that will begin automatically in January without a change to U.S. legislation.

Germany got bids for 8.4 billion euros of the notes sold today, versus a maximum sales target of 5 billion euros, according to the Bundesbank statement.

To contact the reporters on this story: David Goodman in London at dgoodman28@bloomberg.net; Brian Parkin in Berlin at bparkin@bloomberg.net

To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net

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