Switzerland has become the first country to auction off 10-year bonds with a negative yield, as the country is fighting the risk of deflation.
The Swiss Federal Treasury on Wednesday sold 232.501 million Swiss francs ($242 million) of bonds maturing in July 2025 at a yield of -0.055 percent. The bonds carry a 1.5 percent interest rate.
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By issuing a 10-year debt that gives investors a yield under 0 percent the Swiss government has effectively made investors pay for the privilege of lending to it for such a long period. Swedish and Danish debt carry negative yields out to about five years. Even Japanese 10-year bonds’ yields have never gone negative considering the country has been battling deflation since 1990s.