Global Negative-Yielding Debt Declines to $11.4 Trillion: Fitch Report

The total value of negative-yielding government bonds globally decreased to $11.4 trillion as of August 2, down from $11.5 trillion two weeks prior, according to Fitch Ratings. This shift comes as Japanese bond yields increased following recent announcements of additional official stimulus measures.

As of July 15, around $11.5 trillion in sovereign bonds with negative yields were primarily concentrated in Japan and Europe, where central banks have implemented negative interest rate policies and have been actively purchasing bonds to boost their sluggish economies.

Japanese government bonds represented more than half of the negative-yielding debt, totaling $7.2 trillion — a drop from $7.5 trillion two weeks earlier and $7.9 trillion at the end of June. Fitch noted that the overall reduction was somewhat mitigated by a strengthening yen, which kept the total of negative-yielding Japanese bonds above $7 trillion.

The strengthening of the yen followed a decision by the Bank of Japan to maintain its bond purchase levels on July 29, which disappointed traders. This was accompanied by the approval of a significant fiscal package by Prime Minister Shinzo Abe on August 2, amounting to 13.5 trillion yen ($132 billion).

Between July 15 and August 2, the yen appreciated nearly 4 percent against the dollar, driven by disappointing economic data from the U.S. that lowered expectations for a potential interest rate hike by the end of the year.

Additionally, as of August 2, there were $32 billion in Japanese corporate bonds yielding negative rates, representing about 5 percent of the nation’s corporate bond market.

In Europe, the volume of negative-yielding sovereign debt increased to $4.2 trillion from $4.0 trillion on July 15, with German government bonds maturing in up to 13 years also yielding less than zero.