A 100-Year Bond at Less Than 1%? It's No Big Deal

Nothing says it’s cheap to borrow quite like a 100-year bond with a yield of 0.88%. Austria returned to the century-bond club on Wednesday with a new 2 billion-euro ($2.3 billion) debt issue on its most favorable terms yet.

It’s the clearest example of how the European Central Bank’s 1.35 trillion-euro pandemic bond-buying — alongside a similarly sized injection of liquidity into the banking system — is encouraging greater risk taking. That’s what it was designed to do, for issuers and investors alike. The risk for Austria was that the sale was well-received, because the market for these ultra-long issues is thin (although such is the appetite for any safe yield that this auction was more than 10 times oversubscribed). The risk for investors is that the bond doesn’t pay out for 100 years and they’re hardly getting a handsome coupon.