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Opinion
Mark Gilbert and Marcus Ashworth

Austria's Mind-Blowing Bond

Just look at what could happen to your capital.
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AFP / Staff

The 100-year debt sold by Austria this week "blows my mind," Bob Doll, the chief equity strategist at Nuveen Asset Management told Bloomberg Television on Wednesday. The bond also has the potential to blow investors' performance out of the water -- and not in a good way.

The combination of a low interest rate of 2.1 percent plus a maturity date of 2117 makes the security highly sensitive to changes in yield, a phenomenon known as duration. That means bondholders are in line for substantial capital gains if yields decline -- but on the hook for big losses if they rise.