June 13, 2017 / 1:01 PM / 2 years ago

Global negative-yielding sovereign debt jumps to $9.5 trln - Fitch

NEW YORK, June 13 (Reuters) - The value of negative-yielding government bonds globally increased by nearly $1 trillion to $9.5 trillion at the end of May from the beginning of March on worries about the French presidential election and a weaker dollar, Fitch Ratings said on Tuesday.

On March 1, there were $8.6 trillion of negative-yielding sovereign debt.

The value of negative-yielding European and Japanese government debt peaked at about $11.7 trillion last June, according to the rating agency.

“Calming political fears related to the French election and a weaker dollar spurred the increase in the total,” Fitch said in a statement.

Those fears had stemmed from whether anti-European Union candidate Marine Le Pen would win the French presidency, pushing up the yields on French government bonds.

But centrist Emmanuel Macron beat Le Pen in a run-off on May 7, reviving investor demand for French debt which sent some of their yields back into negative territory.

On Sunday, his Republic on the Move (LREM) party scored well in a first-round parliamentary election, putting it on track to capture as many as three quarters of National Assembly seats on June 28, according to pollsters.

The yield on five-year French government notes was -0.255 percent on Monday, down near 1 basis point from Friday. It reached 0.210 percent on March 24, which was the highest since October 2015, Reuters data showed.

The amount of French negative-yielding sovereign debt outstanding climbed to $1.0 trillion from about $750 billion on March 1, Fitch said.

On the currency front, a weaker dollar contributed to a $400 billion increase in the value of negative yielding debt since March 1, it said.

On May 31, the euro stood at $1.1241, stronger than $1.0506 on March 1, while the dollar was at 110.75 yen, weaker than 113.71 yen on March 1, according to Reuters data.

“Higher yields have alleviated some pressure for investors but challenges remain, as yields in many developed economies are still near historic lows,” Fitch said.

Reporting by Richard Leong; Editing by Frances Kerry

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