by Tommy Wilkes
July 1 (Reuters) – The stock of negative-yielding bonds in Europe is rapidly melting and in the eurozone it fell below the 1 trillion euro threshold in June for the first time since minus 2016, data from the Tradeweb trading platform showed on Friday.
The financing costs of the States of the region have risen sharply in recent months, the markets anticipating the rise in interest rates from the European Central Bank (ECB) in an attempt to stem inflation.
This movement logically reduced the outstanding amount of securities showing a negative yield.
According to Tradeweb, this outstanding represented 809 billion euros in June, an amount down 26% compared to May (1,090 billion), or less than 10% of the overall market.
It thus falls to its lowest level since at least 2016, the year in which Tradeweb began to compile this type of data.
Last November, the outstanding amount of negative-yielding bonds in the euro zone still exceeded 9,000 billion euros and represented 67% of the overall outstanding amount. At the end of 2020, this proportion reached 75%.
While all benchmark eurozone government bonds are now offering positive yields, Tradeweb’s data includes inflation-linked bonds, a portion of which are still serving sub-zero yields.
The development is just as spectacular in the corporate bond segment: negative-yielding securities only represented 37 billion euros in June, or barely 1% of the total market.
Their cumulative outstanding still reached 174 billion in May, or 4.6% of the market. And at the end of 2021, it was around 948 billion euros.
(Report Tommy Wilkes, French version Marc Angrand)
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