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Marcus Ashworth

A 100-Year Austrian Bond at 1.2%. What Fresh Madness Is This?

Austria is thinking about a repeat of its 100-year issue, after the success of its 2117 offer. The desperate hunt for yield is taking ever stranger turns.

Oh, Vienna.

Oh, Vienna.

Photographer: JOE KLAMAR/AFP

If you needed any more proof that the world of fixed income has gone mad in the rabid hunt for yield, look no further than the Republic of Austria. If you liked its 100-year debt issued two years ago with a 2.1% return, how about settling for the same maturity for 1.2% now? Yes, you read that right: A 100-year bond yielding about 1.2%.

Austria is in the process of bringing a more run-of-the-mill syndicated five-year issue, although that will probably yield less than the European Central Bank’s minus 40 basis point deposit rate. So Vienna thought it would take the opportunity to test investor demand for a repeat of its 2017 100-year transaction, which truly broke the mold for euro area debt. Belgium and Ireland have plowed the 100-year path too, but only in private format.