By Cynthia Lin

Of Dow Jones NEWSWIRES

NEW YORK -(Dow Jones)- The U.S. government managed to auction off 10-year notes Wednesday without much fanfare, although bond investors weren't too enthusiastic about the record-low yield they featured.

The $24 billion offering attracted mediocre demand, booking a bid-to-cover ratio of 2.90. This measure of overall interest has come in at an average of 3.09 in the last eight 10-year sales and is the weakest since November last year.

Still, the record-low 1.855% yield didn't completely deter buyers. This yield matched the going market rate at the time of the sale, meaning the government didn't have to pay up to solicit greater interest.

Direct bidders, which include domestic banks and fund managers, scooped up 15.8% of the total offering, compared with a 12.5% recent average. Indirect buyers, often reflective of foreign interest, picked up an on-par 38.7%.

Since the auction, Treasury prices, which move inversely to yields, have remained mixed. Benchmark 10-year notes are up 4/32 in price to yield 1.823%, while two-year notes are unchanged in price to yield 0.258%. The 30-year bond is the notable underperformer, down 6/32 to yield 3.034%. The Treasury Department will round out this week's set of sales with a $13 billion 30-year bond offering Thursday.

Ahead of the U.S. auction, Treasurys were bid up as fears about Spain's banking system and Greece's political shuffle left investors seeking relatively safer assets. But as U.S. trading began, investors put those concerns on the back burner and focused on bringing prices down ahead of the sale.

The humdrum results, which come after a similarly average three-year sale Tuesday, underscore Treasury investors' current dilemma. U.S. government bonds are expensive and pay an unappealingly low yield. But debt troubles in Europe and a potential slowdown in the economic recovery at home are spoiling the appetite for riskier assets.

"The choice of buying 10-year [notes] when yields are below 1.90% is relatively simple: it's a decision that the current leg of the European Union crisis will continue to get worse, and soon," said John Briggs, bond strategist at RBS. "This is not an unreasonable position, but if the crisis alleviates even for a day, you'll be under water."

Germany, whose debt is regarded as its region's financial safe-harbor, also booked a new record-low yield at its five-year auction Wednesday. The government drew EUR5.789 billion in demand as it sold EUR4.032 billion, with the average yield coming in at 0.56%--the lowest ever at a German five-year auction.

-By Cynthia Lin, Dow Jones Newswires; 212-416-4403; cynthia.lin@dowjones.com