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100 year bonds anyone?

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  1. #1

    100 year bonds anyone?

    Austria is issuing a 100 year bond ... paying all of about 1% pa.

    I'm not sure which is more worrying - the fact that pension funds are compelled to buy or what it says about the Eurozone economy.

    https://www.armstrongeconomics.com/m...re-the-buyers/


  2. #2

    At least it is not Argentina ...

    shri likes this.

  3. #3

    Then there's the heroic assumption that the Euro will still be around 100 years from now. Not something I'd be prepared to gamble on.


  4. #4

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    Perfect place for China to park all that cash they are getting from dumping US treasuries. That'll show the Orange One

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  5. #5

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    well, what are the alternatives ? buying 10-y bunds with negative yield ? i.e. you pay watever amount, says, 104$ to hold a germany government bond for 10 years, collect zero coupon over the 10 years and get back 100$ end of the tenor..

    that's what it is in the fancy euroland now..

    then a 100y austria bond paying 1% looks attractive doesn't it.. at least you don't have to pay others to hold on to you money

    traineeinvestor likes this.

  6. #6
    Quote Originally Posted by freeier:
    well, what are the alternatives ? buying 10-y bunds with negative yield ? i.e. you pay watever amount, says, 104$ to hold a germany government bond for 10 years, collect zero coupon over the 10 years and get back 100$ end of the tenor..

    that's what it is in the fancy euroland now..

    then a 100y austria bond paying 1% looks attractive doesn't it.. at least you don't have to pay others to hold on to you money
    All true but if I was living in the Eurozone, I'd be putting my money (other than what's needed for short term purposes) into other investments - equities, real estate and non-Euro currencies rather than swallow negative interests rates or the 1% for 100 years offer. The point being that Austria's 100 year bond may look better than some investments but it looks a lot worse than many.

    As an aside, I've been told by a private banker that they have a number of clients who are switching some of their loan facilities from HKD and USD to EURO - cost of funds is around 1.25%.
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  7. #7

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    Quote Originally Posted by traineeinvestor:
    All true but if I was living in the Eurozone, I'd be putting my money (other than what's needed for short term purposes) into other investments - equities, real estate and non-Euro currencies rather than swallow negative interests rates or the 1% for 100 years offer. The point being that Austria's 100 year bond may look better than some investments but it looks a lot worse than many.

    As an aside, I've been told by a private banker that they have a number of clients who are switching some of their loan facilities from HKD and USD to EURO - cost of funds is around 1.25%.
    these switches been happening for a while now.. last 5 years ?
    the whole economic theories are all turning upside down... technically by a no arb theory, a currency with negative rates should perform stronger than one with positive rate, since others would be borrowing and lending money to arb out the impact and mathematically that should happen. however, these days a low interest rate currency tend to fall in value when everyone wants to go for yields...

    so you have pb clients switching their liabilities around instead of assets...

    how these will turn out ? nobody knows.. but i have seen alot of guys with property in hk/china/australia and they are borrowing in EUR for those mortgages.

  8. #8

    Did Austria also announce a successful cryogenics program to push bond sales?

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  9. #9

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    How about Mexico?


    “We wish more sovereigns had century bonds,” said Chamorro, who favors long-dated investment grade debt.
    Name:  D_ExOOpUcAAzCLT.jpg
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    From:

    https://www.bloomberg.com/news/artic...pictet-load-up

  10. #10

    There are perpetual bonds - if century bonds are too short for your taste. UK has some.


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