Corporate Bonds - A Good Time to Borrow

EDITOR'S PERSPECTIVE

Corporate Bonds - the Negative Returns Era

Andrew Deichler 3 March

It's enough to make an investor choke on his chocolate bar! European blue-chip companies such as Nestle recently followed the lead of the German government and started offering negative yields on their bond offerings. Bond investors, who are typically paid to provide financing, are now the ones paying companies to borrow money from them. Why is this happening? Prices in the eurozone are deflating, meaning that euros are appreciating in value. Therefore lending money for negative amounts makes sense, because when you get that money back it will be worth more than it is now. Such bizarre scenarios have become commonplace in today's eurozone. This week, gtnews turns its focus to the corporate bond market, which continues to strengthen as low interest rates persist and offerings attract investors hungy for yield.

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