Haven: bonds for negative interest surpass 10 trillion euros

  • ECO News
  • 7 October 2016

The demand for bonds offering negative income if held until their maturity has risen last month, a sign of greater aversion from investors.

As uncertainty strongly returns to the Euro Area, more exactly to the heart of single currency – Germany’s financial system –, investors once again took a chance in the bond market. September’s risk aversion was so high, they did not mind reinforcing their investments in debt securities that show negative interest rates.

According to Bloomberg Barclays Global Aggregate Index for investment grade bonds, the total nominal global sovereign and private debt value surpassed the 10 trillion euros mark (11.6 trillion dollars) in September, meaning a 6.1% growth since the previous month. This value had decreased after it reached an historical maximum in July, of 10.6 trillion euros (11.9 trillion dollars).

Total of bonds with negative interest rates

Source: Bloomberg (numbers shown refer to trillion dollars)

These bonds offer great quality security, and the demand for them has rocketed in 11 of the 13 countries who have over 100 billion dollars in debt with sub-0% yields.