Demand weakens at German bond auctions: the €5 billion Bobl drew €4.53 billion in bids, and €1.65 billion of €2 billion was allotted in 2047 and 2056 bonds

According to the Bundesbank auction result of 22 September, a 5,000 million euro increase was targeted for the 2.90% coupon Bobl maturing on 8 October 2031; total bids came to only 4,530 million euros (2,470 million competitive, 2,060 million non-competitive). Allotment was 3,735 million euros, the average yield 3.28% and the cover ratio 1.2; the Federal Finance Agency retained 1,265 million euros, or 25.3% of the increase, on its own account for sale in the secondary market. Total issuance in this series rose to 22,500 million euros.

At the multiple auction on 23 September, the 3.40% coupon 2047 bond drew 1,794 million euros in bids and 869.74 million euros was allotted, at an average yield of 3.78% and a cover ratio of 2.1, with 130.26 million euros retained by the agency. The 2.90% coupon 2056 bond drew 1,241 million euros in bids and 783.60 million euros was allotted, at an average yield of 3.80% and a cover ratio of 1.6, with 216.40 million euros retained by the agency. Newsquawk summarised the auction as 1.65 billion euros sold against a 2 billion euro target.

The same day Newsquawk wrote that the German 10-year yield was at a weekly high and back above 3.50%; ideal-investisseur data, however, show the 10-year Bund yield at 3.46%, the French OAT yield at 4.48% and the spread at 101.7 basis points for 23 September. The two sources conflict on the Bund level. The Federal Government said it would announce its Q4 issuance calendar update on 24 September; the content of the update could not be verified at the time of writing.