Chocolate - the new gold: why investors are invested in bonds with negative interest rates?
Investors could not
dote bonds Nestle
this week. And many still only
One way to describe what is happening
Now in Europe, it is all very strange.
It seems that now the producer of chocolate
It looks like the new gold?
As the newspaper writes
CNN-Money, it
an unprecedented event when
Nestle corporate debt is gone
minus this week. It means,
investors are willing to pay for the right to
put their money into the safety of
Swiss chocolate company.
Bonds can also buy in a package
with an inscription: "We believe in the
Nestle".
"You look at something,
which has never happened before. it
a completely new phenomenon, - says
Richard Salditt credit analyst
Bloomberg, - Strange things are happening on
financial markets".
No, not without reason, investors
become addicted to chocolate
bars. Denominated in euro
corporate debt other superbezopasnyh
(Not producing chocolate) European
companies - Royal Dutch Shell and Novartis - are also
They are in the negative boundaries.
There are a few blue chips among
US companies are experiencing
this negative trend - Euro-bonds
Bank of America, General Electric and McDonald's
traded near zero - Salditt said.
All this is very unusual,
the author writes. After all, ordinary investors,
which are invested in bonds,
receive income from them, and not vice versa,
invest their money and still "underpaid"
for that. So what caused this incomprehensible
and at the same time an interesting situation?
It seems that this results
various experiments central
banks around the world - each regulator
in his own way trying to push the sluggish
economy. Last year, the European
Central Bank planned to do
the benchmark interest rate below zero,
to revive growth, the ECB is now thinking
"Introduce" at least $ 1.3 trillion
financial system to fight
deflation. Many countries are now taking
very aggressive and unconventional measures.
For example, the central bank has reduced Denmark
rates to negative boundaries.
"The reason that
forcing central banks to set
these low rates - is actually
participate in the fight against currency using
policy rate cut to zero".
- says Barnaby Martin, credit
strategist at Bank of America Merrill Lynch.
And the trend
such transitions to the new rates
grows: central banks have already shot down
negative yield bonds
border in Belgium, Denmark, France,
Germany, Japan and the Netherlands. Again
does this mean that investors mostly
willing to lose money when buying
debt securities.
Incredibly,
negative high-yield bonds
were the fastest-growing "class
assets" in Europe over the past year,
According to Bank of America Merrill Lynch. Estimated
Bank, the total amount of European securities
debt, giving an income below zero, increased
to € 1.2 trillion - compared to 500 billion €
the end of October, and zero in June.
Martin said it
"unprecedented" chance to
see negative returns in
either the corporate or sovereign
bonds.
investors need now
decide where to invest their money. Till
banks have virtually no negative
interest rates for deposits, people with
$ 100 million can not just put them in
local bank and wait to get
returns well above zero. But they can
invest in those "ultrabezopasnye"
corporate bonds, for example,
issued by the company Nestle - this will
more sense.
"Say you soon
received more than $ 1 trillion euros. Everything, that
need your "new money" find a home "
- she says Thomas said Urano, managing
director at Sage Advisory. "I could leave
this amount in the bank, and likely to lose
money, or I could put them in
corporate bonds and, possibly,
losing only one basis point".
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