The German government is raising debt on a massive scale to finance the coronavirus stimulus package.
On Wednesday, Germany sold €4.14 billion ($4.6 billion) of debt maturing in 10 years. That is the highest amount of 10-year bonds sold since 2014. Demand for securities, however, declined with the 10-year bond offering seeing an oversubscription of just under twice the amount offered. That’s the least since April, according to Bloomberg.
Bond prices drop, pushing yields higher when the supply of bonds rises. Germany's massive issuance, however, may not lead to a spike in bond yields, courtesy of the European Central Bank's unprecedented bond-buying program. That said, the resulting rise in the euro liquidity could weigh over the common currency.
The German finance ministry is planning to increase new borrowing by €62.5 billion to €218.5 billion, Reuters reported on Monday, citing two people familiar with the matter.
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