Austria sold 1 billion euros worth of two government bonds at record low yields on Tuesday, paying roughly half the rates prevailing in June thanks to its status as one of the euro zone's few financial safe havens. The average yield on the 2019 bond fell to 1.021 percent on the sale that was nearly 2.6 times oversubscribed. The average yield on the 2022 issue, which was more than 2.6 times oversubscribed, fell to 1.706 percent.
"This reflects the massive decline in interest rate levels as well as the fact that Austria as an issuer is very much in demand internationally," Martha Oberndorfer, who leads the Austrian Federal Financing Agency, told Reuters. She declined to forecast whether the decline in yields could continue, saying only that rates were now at historic lows that the market had not expected at the start of the year.
Her agency has said it expects to issue 20-24 billion euros ($26-$31 billion) worth of government bonds in 2013 out of total borrowing of 27-30 billion euros, little changed from 2012. The next bond auction is due on January 8. Oberndorfer left open prospects that Austria could amend previous borrowing trends in which it has done a syndicated debt deal in lieu of a bond tender early in the year. "We don't have a big maturity in January so it can well be that we do not a large-volume syndicated deal in January," she said.
Oberndorfer declined comment on media reports that she could leave the agency soon to take up a senior post at the Austrian central bank. Standard & Poor's stripped Austria of its AAA rating this year. Moody's has affirmed Austria's top rating but warned it might cut the rating due to the country's vulnerability to the euro zone debt crisis.
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