Fitch: Negative Yielding Sovereign Debt Total Falls to $10.9 Trillion
European countries remain a fixture in the negative yielding sovereign debt universe, as all countries with negative-yielding debt besides Japan are in the continent. As a group, European countries also have the lowest aggregate yields, with Germany leading the way at negative 30 bps. By contrast, the comparable average yield on $38 trillion in investment-grade (IG) sovereign debt from 34 countries is 84 bps.
"Despite slight increases in yields recently, the amount of negative-yielding debt remains a bellwether for the challenges fixed income investors globally face in an ultra-low yield environment," said Robert Grossman, Head of Macro Credit Research.
The result of low and negative yields is a sharp cut in investment income for sovereign investors globally. Fitch calculates investors in the $38 trillion of IG sovereign debt are prospectively earning nearly $500 billion less annually in investment income than they would have earned with yields available in 2011.
Banks, insurers and pension funds have also felt the pinch as central bank asset purchase programs, negative rate policies and investor demand for longer-dated paper have flattened and lowered yield curves significantly.
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