World’s Biggest Bond Traders Undeterred by Negative Yields

by Brian Chappatta and Andrea Wong

It might be considered absurd, if not for the unprecedented contortions in global financial markets.

Pacific Investment Management Co.’s largest international bond fund and China are piling into negative-yielding Japanese debt, buying securities that pay out less than the purchase price. And there’s a way to turn a tidy profit off the trade.

At the heart of the strategy is the world’s insatiable appetite for dollar assets, which is presenting an opportunity for investors with greenbacks to spare: the chance to pick up extra yield, a luxury in an era of record-low interest rates.

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