The Traderszone Network

Published in TZ Latest News 12 July, 2016 by The TZ Newswire Staff

Germany Is About To Sell Zero-Coupon 10 Year Bonds For The First Time Ever

When the financial media says that governments get paid to issue negative yielding debt, that is not exactly true: most sovereign issuers still pay out a cash coupon, a modest as it may be, while they pocket the negative amortization on a bond issued above par for the life of the bond resulting what ultimately ends up being a negative yield for the buyer net of all cashflows at maturity. However, the lower – or more negative – yields get, the less the need for an issuer to actually pay a cash coupon: after all with a negative yield, it is essentially superfluous.

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