Volkswagen Bonds

Volkswagen AG sold Europe's first corporate bonds of the year, The company sold €9.8 billion ($12.8 billion) worth of bonds. The bond sale came at a time when the yield to maturity of European corporate bonds had fallen to 137 basis points above government bonds. This yield spread is an indicator of the relative level of risk between the two different bonds. The falling yield spread is an indication of a lower default risk premium, which is the result of a smaller default risk in the market or a lower risk premium required by investors.