Prime Nordic on European interest rates & government bond yields


13 Sep
13Sep

Prime Nordic has observed negative interest rates & government bond yields in Europe as part of a growing trend.

Prime Nordic believes that the Prime Nordic Growth Bonds may appeal to investors with a higher appetite for risk, yielding a positive return on investment, as opposed to the negative yield available with the so called “risk free” rate.

Germany has auctioned Negative Yield Government Bonds

2019 has seen Germany auction 30-year bonds with a negative yield for the first time, a milestone for a fixed-income market where the entire curve now yields less than zero.
In the past year, German 30-year bonds have returned over 30%, compared with returns of around 10% on 10-year Bunds. This comes as the pool of negative-yielding government bonds deepens globally

https://www.reuters.com/article/germany-auction/update-1-germany-sells-new-30-year-bond-with-negative-yield-a-first-idUSL5N25H29G

The governments of Austria, Denmark, Finland, France, Japan, Netherlands, Sweden and Switzerland are also selling ten-year bonds with negative interest yields.

http://theconversation.com/guaranteed-to-lose-money-welcome-to-the-bizarro-world-of-negative-interest-rates-119994

Negative mortgage rates in Denmark

A Danish bank has launched the world’s first negative interest rate mortgage – handing out loans to homeowners where the charge is minus 0.5% a year.

Negative interest rates effectively mean that a bank pays a borrower to take money off their hands, so they pay back less than they have been loaned.

Jyske Bank, Denmark’s third largest, has begun offering borrowers a 10-year deal at -0.5%, while another Danish bank, Nordea, says it will begin offering 20-year fixed-rate deals at 0% and a 30-year mortgage at 0.5%.

Under its negative mortgage, Jyske said borrowers will make a monthly repayment as usual – but the amount still outstanding will be reduced each month by more than the borrower has paid.

https://www.theguardian.com/money/2019/aug/13/danish-bank-launches-worlds-first-negative-interest-rate-mortgage

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