Sub-Zero Yields Start Taking Hold in Europe's Junk-Bond Market
Sub-Zero Yields Start Taking Hold in Europe's Junk-Bond Market
(Bloomberg) -- Central bankers hinting at more monetary stimulus have depressed yields so much that even some European junk bonds trade at levels where investors have to pay for the privilege of holding them.
The number of euro-denominated junk bonds trading with a negative yield -- a status until recently associated with ultra-safe sovereign borrowers -- now stands at 14, according to data compiled by Bloomberg. At the start of the year there were none.
Cheap money policies since the financial crisis have kept interest rates at, or near, all-time lows for the last decade. That’s prompted many investors to buy riskier assets that yield enough for them to meet their liabilities, driving bond markets higher and yields lower. The European Central Bank said on Monday it’s ready to add more stimulus to the euro zone, indicating that an end to the age of ultra-low borrowing costs is far from over.
The European trend follows a global pattern that’s seen the volume of securities yielding less than zero hovering just above $12.8 trillion, according to Bank of America Merrill Lynch.
High yield borrowers with bonds denominated in euros trading with a negative yield include:
- Ardagh Packaging Finance plc /Ardagh Holdings USA Inc.
- Altice Luxembourg SA
- Altice France SA
- Axalta Coating Systems LLC
- Constellium NV
- Arena Luxembourg Finance Sarl
- EC Finance Plc
- Nexi Capital SpA
- Nokia Corp.
- LSF10 Wolverine Investments SCA
- Smurfit Kappa Acquisitions ULC
- OI European Group BV
- Becton Dickinson Euro Finance Sarl
- WMG Acquisition Corp.
To contact the reporters on this story: Laura Benitez in London at lbenitez1@bloomberg.net;Tasos Vossos in London at tvossos@bloomberg.net
To contact the editors responsible for this story: Vivianne Rodrigues at vrodrigues3@bloomberg.net, Chris Vellacott, Abigail Moses
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