BOBL introduction and background |
BOBL refers to German government bonds with between 4.5 and 5.5 years to expiry. BOBL rates reflect investor influence in German government debt and represent the medium-term obligations of the German state. Like most German state debt, BOBLs typically trade at low yields and elevated prices, as the German government is considered one of the most financially stable major economies.
The long and short-dated equivalents of Bunds are the Schatz and Bund. During the lifecycle of a ten-year bond the same security will pass through a period as a Bund, BOBL, and Schatz. Investors may hold these bonds as low-risk cash equivalents or trade them in anticipation of price increases.
The yield of BOBLs is determined by the financial standing of the German state and general investor confidence. As a safe-haven asset, BOBL may see price increases during times of general market volatility, depressing their yield.
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