www.armstrongeconomics.com
Austria was able to sell its second 100-year bond in history at just a
yield of just over 1.00%. Some argue that capital has been forced to
buy anything that has a yield which the ECB has been forcing negative
interest rates. Why would anyone in their right mind buy a 100-year bond
for 1%? The buyers appear to be pension funds who MUST own government
debt as a matter of law.
Austria launched the sale of a 100-year bond on Tuesday after
overwhelming investor interest gave its debt officials confidence it
could become the first Eurozone country to sell a “century” bond
publicly through a group of banks. There has been no paper on this part
of the yield curve. Because of comments by Draghi, it is also expected
that positive yielding paper will vanish in the Eurozone. As it stands,
it will take investors 44 years to recoup their original capital. That
will surely be a huge loss.
Austria is planning to sell the bonds via syndication to help access a
wider base of investors. The banks involved are Bank of America Merrill
Lynch, Erste Group, Goldman Sachs, NatWest Markets and Societe
Generale. There is a serious problem brewing where as a matter of law
pension fund must buy government paper and at low rates, the pension
funds face massive failures going into the next 6 years.
沒有留言:
張貼留言