* Greek aid tranche delayed again, Eurogroup meets Monday
* Lack of Greek solution seen supporting German debt auction
* Germany to sell 4 billion euros of 10-year debt
By Marius Zaharia
Nov 21 Safe-haven German Bunds rose on Wednesday
after Greece's international lenders failed to reach an
agreement to release an aid tranche to Athens, boding well for a
debt auction later in the day.
Euro zone finance ministers, the International Monetary Fund
and the European Central Bank will meet again on Monday to try
to pencil a deal on how to get the Greece's debt down to a
The main sticking point is whether to push back the target
date for the debt to fall to 120 percent of output to 2022 from
2020. The latter cannot be achieved without euro zone members
taking a loss on what Greece owes them but Germany and others
oppose such a step.
The lack of consensus leaves the market no choice but to
price in the possibility that Greece may receive no further help
and face an uncontrolled default that may see it pitched out of
the currency union.
Eurogroup Chairman Jean-Claude Juncker said the delay was
caused by "technical reasons" and other officials said a deal
was close, preventing investors from panicking.
"They seem to be making the right noises ... but it's a bit
disappointing that they failed," one trader said.
Bund futures were 13 ticks higher on the day at
142.51, having fallen by 62 ticks on Tuesday on expectations a
deal would be reached.
Cash 10-year Bund yields were 1.2 basis point
lower at 1.404 percent, in the middle of a roughly 50 bps
trading rage that has held for the past six months.
Greek and other peripheral country debt showed little
reaction, reflecting expectations a deal would eventually be
However, the appeal of low-risk bonds looked set to ease an
auction of up to 4 billion euros of 10-year German debt.
"I would assume there are a couple of investors around that
still think the sovereign debt crisis is here to stay. They want
this triple-A Bund and nothing else," said Marius Daheim, chief
strategist at Bayerische Landesbank.
Commerzbank strategists called the failure to reach a deal
on Greece an "unhoped-for support for German supply" and said
investors should buy Bunds, having earlier recommended they
Societe Generale strategists said investors may also be
attracted by relative value in German 10-year bonds, which have
underperformed the five-year sector in the past month.
The bond was, however, sold at an average yield of 1.56
percent at the last auction a month ago, and the fall in yields
since then might put off some investors.