Negative-Yield Debt Falls to $10.7 Trillion After September Rise

  • World’s less-than-zero bonds total market value drops by 10%
  • Almost all is from Japan, Europe; U.K.’s sum is double U.S.’s

The market value of the world’s negative-yielding bonds fell by 10 percent last week to $10.7 trillion.

The surge in debt certain to lose money if held to maturity isn’t necessarily easing, because the drop follows September’s jump after the total had fallen for two straight months for the first time in a year.

The market value of negative-yielding sovereign, government-related, corporate and securitized debt in the Bloomberg Barclays Global Aggregate Index hit $12.2 trillion in June. That was the highest month-end total since the figure began its unprecedented climb in August 2014, when the total was $476 billion, up from less than $7 billion a year before that.

Japan, where policy makers have been trying to coax yields up since mid-September, remains ground sub-zero, accounting for almost exactly half the world’s total. About 44 percent comes from Western Europe. Germany, France, the Netherlands, Spain, Belgium and Italy are the continent’s top five.

The U.S. accounts for $22 billion, just 0.2 percent of the global total, less than half the U.K’s $52 billion.

Less than a tenth of the world’s negative-yielding debt was issued by businesses, through corporate bonds and securitized debt.

These totals include both new negative-yielding issues and bonds with prices that rose enough to push their yields into the money-losing zone. The Bloomberg Barclays Global Aggregate Index has a market capitalization of $47 trillion and includes investment-grade debt from 24 developed- and emerging-economy markets.

The benchmark gauge does not include maturities of less than a year, which tend to have lower yields, so the value of many short-term less-than-zero bonds aren’t counted here. The totals are based on market values, which include accrued interest. A similar Bloomberg News story last week was based on face amounts converted to dollars as of the end of each month, a slightly different metric.

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