National Post

Contagion seeps into once untouchable Germany
National Post

German immunity to debt contagion vanished Wednesday as the country was rebuffed by capital markets, a new indication the crisis has seeped into Europe’s core.

A disastrous bond auction, in which Germany failed to get bids for 40% of its securities, put a big dent in the country’s creditworthiness, which until now has been treated as without blemish.

“We are in uncharted waters,” said Nicholas Spiro, managing director of Spiro Sovereign Strategy in London. “There’s the fear you’ve got a broken eurozone bond market and no amount of funds and reforms can repair it.”

Bids for German 10-year bonds totaled €3.9-billion, forcing the country’s financing authority to take down the additional €2.1-billion and sending shivers through a pillar of support that has redeemed the eurozone since the outset of the crisis two years ago.

Speaking Wednesday at an event in Montreal, Bank of Canada governor Mark Carney said, “The crisis appears barely contained.”