(Adds fresh data)
By John Geddie
LONDON, Jan 28 (Reuters) - Nearly a quarter of all euro zone government bonds now have yields below zero, data from Tradeweb shows, a consequence of ECB schemes designed to channel money into the most credit-starved corners of the bloc’s weak economy.
This means investors are effectively paying to lend to countries, exposing them to potential losses.
European Central Bank policy — including interest rates below zero and asset purchases — has buoyed bond prices, knocking the yields down.
“Up until recently we’ve just been extending maturities slightly along the curve, but now it’s such a large proportion of negative-yielding bonds that we have to have slightly different conversations with our clients,” said Gareth Colesmith, senior portfolio management at Insight Investment.
Electronic marketplace Tradeweb’s calculations, based on data taken just before markets closed on Monday, show that 23 percent of all euro-denominated government bonds have bid yields below zero.
Taking the total outstanding volume of those bonds, around 28 percent is negative yielding.
German bonds — the top-rated debt in the euro zone and the bloc’s benchmark — carry negative yields out to maturities of five years.
The two-year Schatz, for example, is yielding minus 0.158 percent.
Lower-rated Spanish and Italian bonds pay just around 1 percent interest on five-year debt .
Yields across the bloc made their latest charge lower after the ECB announced last week it would start buying bonds, including government debt, with newly printed money at a rate of 60 billion euros a month from March.
Economists say the scheme, combined with a recovery in bank lending, a weak euro and lower oil prices, could stimulate much-needed growth in the 19-member bloc.
Tradeweb is an affiliate of Thomson Reuters. (Editing by Nigel Stephenson/Jermey Gaunt/Susan Fenton)