Investors snap up £9bn of Brussels bonds which offer negative returns

The European Union hit the headlines last week when it borrowed €17billion, or £15billion, in ‘social bonds’, which would be dished out to member states to help them recover from the coronavirus pandemic. Brussels’ first ever coronavirus-linked issuance sparked a feeding frenzy from investors, with demand for the debt of its 27 member states hitting a reported €233billion, or £211billion, enough to fill it 14 times over. The majority of the issue was €10billion in 10-year bonds. It attracted €145billion of demand alone, which may appear remarkable considering it offered to pay investors a ‘negative yield’ of -0.26 per cent. That is, investors queued around the block for the privilege of owning billions in investments which pledged to pay them back less than they invested in 10 years’ time.