Seeking to capitalise on its current reputation of safe haven, Germany has auctioned off €3.35bn worth of five-year bonds at a record low interest rate. The bonds, which are due in April 2017, were auctioned off at an average yield of 0.31 percent, down from 0.52 percent last auction.

The bid-to-cover ratio, or the measure of demand for the bonds, was 2.6, compared to a previous result of 2.7.

Spanish bonds have been languishing at around seven percent yields for the past few months, and analysts have noted that Germany’s particularly low interest rates reflect a lack of trust in the European Central Bank’s crisis-fighting efforts. Last week, ECB President Mario Draghi hinted that they would be stepping up measures to counter the rise in borrowing costs facing Spain and Italy.

Spanish yield fell sharply following Draghi’s remarks, but the unprecedented lows in German bond yields can represent an ‘insurance trade’ by investors, according to Steven Major, global head of fixed income research at HSBC. He suggests investors are not convinced Draghi will be able to deliver.