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By Dave Graham
BERLIN, Sept 15 (Reuters) - Germany is unlikely to sell another U.S. dollar bond this year despite broadening its investor base with its latest issue, the head of the German government's debt management office said on Tuesday.
Europe's benchmark issuer of debt on Monday priced its first new dollar bond in four years, a 3-year, $4.0 billion issue which bankers involved in the sale said was well oversubscribed.
In an interview with Reuters, German Finance Agency Managing Director Carl Heinz Daube said another dollar bond issue was not on the cards this year.
"That's not planned, and is unlikely in terms of the market situation. To be clear about this, we don't want to become a permanent issuer of U.S. dollar bonds," he said.
Daube said the sale had been "very successful" for the federal government, noting it had attracted more than $11 billion worth of bids from over 200 investors.
"Like many other market participants we noticed the arbitrage on a U.S. dollar issue was becoming more and more favourable in relation to a comparable euro issue," he added.
"With this instrument we've extended our investor base and laid the foundations for future borrowing in this market segment," Daube said, adding the sale might also encourage new investors to buy euro issuance from Germany too.
Of the dollar bond, which sold at mid-swaps minus 25 basis points, Daube said 45 percent had been bought by central banks. Some 27 percent was bought by fund managers, 21 percent by private banks and 4 percent by insurers and pension funds.
European investors bought 43 percent of the issue, with 27 percent of it going to Asia. The main "added value" of the sale was in the 21 percent going to U.S. investors, Daube added.
A further nine percent was sold into the Middle East.
Future dollar bond sales would depend on market conditions, and would therefore be made "opportunistically," he said.
The Finance Agency also observed the market for opportunities to issue in other currencies, Daube said.
"One could think about using yen or British pounds. But the markets are much smaller and less liquid compared with euros or dollars, so I don't see a big advantage there," he added.
Germany has also said it aims to sell more inflation-indexed bonds (linkers) when market conditions are right.
Daube noted that the Agency still hopes to top-up the 2020 linker it placed earlier this year, and is also waiting for a chance to sell its first 30-year linker. At the moment, conditions were not suitable for either, he said.
"But this is not cast in stone," he added. "We could still have a top-up or a new issue this year." (Reporting by Dave Graham; editing by Chris Pizzey)