Germany has tapped the sovereign debt market for 3.972bn euros with an issuance of five-year bonds, but the Treasury had to pay higher financing costs.

Bond yields averaged 0.61%, twice the price it paid in its previous comparable auction.

The bid-to-cover ratio was 1.4. Demand for German debt has been wavering since the European Central Bank (ECB) announced its bond purchase plan.

Earlier, the Italian Treasury issued its own one-year debt for €9bn. It had to pay a yield of 1.692%, the lowest for this security since March 13th. The bid-to-cover ratio was 1.65.

The ECB's new plan to support troubed Eurozone members has brought down the yields of Spanish and Italian debt as investors feel more secure about buying the higher yielding bonds.

MD

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