Austria’s Century Bonds Have Cost Investors Dearly
The plummeting value of the 100-year debt illustrates how the fixed-income environment has changed.
Austria secured super cheap ultra-long funding with its 100-year bonds. Investors haven’t fared so well.
Photographer: Thomas Kronsteiner/Getty Images EuropeIt’s been a rough couple of years for bond investors as yields have soared. As with any sharp change in market conditions, there were some roller coasters to avoid. Top of the list are the trailblazing 100-year bonds sold by Austria. It's a tale of how fast things change — and is likely to consign century bonds to the category of curiosities from the era of super-low yields.
Austria launched its inaugural century bond in 2017, paying a coupon of 2.1%. Six subsequent increases have doubled the size to €6 billion ($6.5 billion). The nation capitalized on huge demand for bonds during the pandemic by selling a second 100-year issue, the 0.85% of 2120. That’s been tapped a staggering 15 times to boost it to €4.6 billion.