Germany is About to Sell Zero-Coupon 10 Year Bonds for the First Time Ever

from Zero Hedge

When the financial media says that governments get paid to issue negative yielding debt, that is not exactly true: most sovereign issuers still pay out a cash coupon, a modest as it may be, while they pocket the negative amortization on a bond issued above par for the life of the bond resulting what ultimately ends up being a negative yield for the buyer net of all cashflows at maturity. However, the lower – or more negative – yields get, the less the need for an issuer to actually pay a cash coupon: after all with a negative yield, it is essentially superfluous.

Still, while no sovereign has issued bond with negative cash coupons yet, some are starting to issue zero-coupon ten years: bonds which pay no cash coupons at all.

This is precisely what Germany is about to do in a few hours.

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