100 year t-bonds the new norm? 2 years ago Austria sold 100-year t-bond with a 2.1% yield. Now it’s selling another century bond, but with a 1.2% yield.

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by JealousEntrepreneur


After Argentinia in June 2017 sold it’s first 100 year bonds, Austria jumped on the train in September 2017 and sold them successfully for a coupon of 2.1%. Now they want to repeat it with a coupon of 1.2%.

If you wanted to buy any of those 2.1% 2117 Austria bonds right now, you’d have to pay 60% more than their issue price; they’ve been a great success. They currently yield about 1.12%, so that’s where you’d expect any new 2119 offer would be pitched – if it comes. A new-issue premium would probably take it up to close to 1.2%.

So the bond buyers in 2017 got 60% profit in 2 years. I would expect other countries to follow. It seems to be a major sign of a bond market bubble. Trading those 100 year bonds at that low yields is like a game of hot potato.

What’s next 500 year t-bonds? Futures on Mars colony bonds expiry in 2320?

Source: www.bloomberg.com/opinion/articles/2019-06-25/a-100-year-austrian-bond-at-1-2-what-fresh-madness-is-this

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