100-Year Bonds Are a Dangerous Temptation
Austria’s century debt has performed much better than Argentina’s on value terms, but even the safest stuff carries real risk at this duration.
Dicey stuff.
Photographer: MANJUNATH KIRAN/AFPTwo 100-year bonds for countries that start with the letter A. Other than that, there’s pretty much zilch in common between the century maturity debt issued by Austria and Argentina, as we’ve seen over the past few weeks.
Nothing illustrates the desperate hunt for yield among high-quality global issues better than Austria’s 100-year bond. The debt was issued at just below “par” (the nominal value of 100 used when first issuing bonds) in 2017, but in the two years subsequently it has more than doubled in worth to 210. That’s an annualized return of nearly 50%. The price has risen 30% since June alone, when Austria reopened the bond to new buyers.