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UK sells first government bond with a negative yield

Rabu, 20 Mei 2020 / 16:45 WIB
UK sells first government bond with a negative yield
ILUSTRASI. Queen Elizabeth II is seen with printed medical masks on the Pound banknotes in this illustration taken

Sumber: Reuters | Editor: Anna Suci Perwitasari

KONTAN.CO.ID - LONDON. Britain sold a government bond that pays a negative yield for the first time on Wednesday - meaning that Britain's government is effectively being paid to borrow as investors agreed to be paid back slightly less than they lent.

The bond, which matures in July 2023, sold at an average yield of -0.003%.

While investors will receive an annual interest payment of 0.75%, they paid above face value for the bond so the actual return in cash terms is less than they have lent.

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Demand for the bond was low by recent standards, with investors bidding for just over twice the £ 3.75 billion (US$ 4.59 billion) on offer.

The last time a bid-to-cover ratio was below Wednesday's 2.15 was on March 19, before the BoE announced it would buy an extra 200 billion pounds of assets, mostly government bonds, to support the economy through the coronavirus crisis