UK sells negative yield bonds for the first time

US, WASHINGTON (ORDO NEWS) — On May 20, the UK government issued three-year government bonds totaling £ 3.75 billion, or $ 4.6 billion. A distinctive feature of this auction was the negative yield on securities: -0.007%, -0.003% and 0.001%.

This implies that investors holding debt to maturity will receive less than they paid when buying it, given the regular payment of interest and repayment of the principal.

The UK has already sold one-month negative yield bills in 2016, but this is the first time it has sold ordinary bonds with yields below zero.

At the same time, there were more people wishing to buy such securities than they needed: applications were filed for £ 8.1 billion, that is, for a volume more than double the declared amount.

Interest in non-standard government bonds was spurred by low interest rates and a slowdown in inflation, which reached 0.8% in April. Now the Bank of England is just deciding what measures to take in order to stimulate higher prices and return the figure to a target of 2%.


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