Monday, July 23, 2012

5-year Swiss rate goes negative

The Swiss government bond curve is now negative for maturities of five years and under. Investors are willing to lock up a negative yield for 5 years just to get out of euro denominated assets without taking much FX risk. Fears of Eurozone breakup are escalating.

As a result, debt issuance for Switzerland's government is becoming a profit center rather than a source of interest expense.

Swiss government curve



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