Investors Pay to Fund EFSF Aid With Bills at Negative Yield
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Investors are paying the European Financial Stability Facility for the privilege of financing Europe’s temporary rescue fund, with demand to buy its debt increasing even as yields drop below zero.
The facility auctioned 1.49 billion euros ($1.8 billion) of six-month bills at a yield of minus 0.0113 percent today, Germany’s Bundesbank, which acts as agent for the sales, said in a statement. Participants bid for 2.97 times the amount of debt allocated, compared to a so-called bid-to-cover ratio of 2.06 when the fund sold 182-day bills at a yield of 0.1421 percent on June 19. A negative yield on EFSF bills means investors who hold them to maturity will receive less than they paid to buy them.