Fitch: Widening Pool of Negative-Yielding Debt Squeezing Sovereign Investors


NEW YORK, May 04 (Fitch) Growth in the amount of sovereign debt trading at negative yields is putting increasing pressure on investors that depend heavily on income from government securities, according to Fitch Ratings. The global supply of long- and short-term sovereign securities yielding less than zero now nears $10 trillion, constraining the ability of banks, insurers and other sovereign investors to generate fixed-income returns. “Unconventional monetary policies in Japan and Europe have pushed sovereign yields to new lows, limiting investors’ ability to maintain profits through investment income,” says Robert Grossman, Managing Director, Macro Credit Research. The total amount of negative yielding government debt stood at $9.9 trillion ($6.8 long-term and $3.1 short-term) globally as of April 25, 2016. This debt currently yields negative 24 basis points (negative $24 billion) annually.

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