World’s negative-yielding debt pile hits record $17.05tn

Nearly $600bn worth of bonds have seen their yields turn negative this week

Nearly 26 per cent of the world’s investment-grade debt is now sub-zero. A slide in the US dollar may have amplified the jump in sub-zero bonds. Reuters

The world’s stockpile of negative-yielding debt has swelled to a record in the wake of the US election, as investors lower expectations for a fiscal splurge and turn their focus back to monetary support.

The market value of the Bloomberg Barclays Global Negative Yielding Debt Index rose to $17.05 trillion on Thursday, the highest level ever recorded and narrowly eclipsing the $17.04tn it reached in August 2019.

Almost $600 billion of bonds have seen their yields turn negative this week, meaning 26 per cent of the world’s investment-grade debt is now sub-zero.

Thanks to the slew of global issuance in 2020 as governments and companies wrestle with the impact of the coronavirus, that remains 30 per cent below the peak reached last year.

Treasuries and other high-rated bonds have been surging as traders dial down expectations for a massive fiscal spending package under a unified Democratic government.

At the same time, the Bank of England and Reserve Bank of Australia have both announced plans to expand bond buying this week, while the Federal Reserve discussed a shift in its programme.

A slide in the US dollar – the Bloomberg Dollar Spot Index fell to its lowest in more than two years – may have amplified the jump in sub-zero bonds. A sizeable amount of negative-yielding debt is denominated in euros and yen.