U.S. Markets

Global negative-yielding debt slips to $11.4 trillion: Fitch

Employees of a foreign exchange trading company work under monitors displaying the 10-year Japanese government bond yield in Tokyo, Japan, February 9, 2016. REUTERS/Yuya Shino

(Reuters) - The global amount of negative-yielding government bonds edged down to $11.4 trillion on Aug. 2 from two weeks ago as Japanese debt yields rose in reaction to more official stimulus announcements, Fitch Ratings said on Wednesday.

On July 15, there were about $11.5 trillion in sovereign bonds with negative yields in Japan and Europe, whose central banks adopted negative rate policies and have been purchasing bonds heavily in an effort to stimulate their sluggish economies.

Japanese government bonds accounted for more than half the negative-yielding debt with $7.2 trillion, down from $7.5 trillion two weeks earlier and $7.9 trillion on June 27, the rating agency said.

“This decrease in negative-yielding debt has been partially offset by a strengthening yen, keeping the Japanese total above $7 trillion,” Fitch said in a statement.

The yen strengthened after the Bank of Japan disappointed traders by keeping its bond purchases steady on July 29, followed by Japanese Prime Minister Shinzo Abe’s cabinet approval of 13.5 trillion yen ($132 billion) in fiscal measures on Aug. 2.

From July 15 to Aug. 2, the yen gained nearly 4 percent against the dollar JPY= as disappointing U.S. economic data reduced investors' expectations of a possible U.S. rate increase by year-end, according to Reuters data.

In addition to local government bonds, $32 billion in Japanese corporate bonds carried negative yields on Aug. 2, which represented about 5 percent of that country’s entire corporate bond sector, it said.

In Europe, the sum of negative-yielding sovereign debt edged up to $4.2 trillion from $4.0 trillion on July 15. German government bonds that mature out to 13 years were yielding less than zero, Fitch said.

Reporting By Richard Leong; Editing by Frances Kerry