Finland Enters The NIRP Club As Germany Sells 2 Year Subzero Debt For The First Time

Tyler Durden's picture


The NIRP club, or those countries whose 2 Year (or longer) bonds trade inside negative territory as presented yesterday, is happy to welcome Finland among its ranks, following the country's 2 Year bond briefly touching on -.008% minutes ago (since "recovering" to 0.0000% briefly). Other proud member countries include Holland, Germany (which earlier issued 2 Year debt at sub zero rates for the first time ever), Denmark, and Switzerland, or Europe's AAA-list. On the other end, the peripherals continue to trade on an ever more unsustainable basis. Europe has now become one big pair trade: everyone is long the viable countries and short the... less than viable ones.

And some more color on Germany's just concluded 2 Year bond issue which priced at -0.06% via Reuters:

Germany sold 4.17 billion euros of two-year government bonds on Tuesday, auctioning the paper with a negative yield and meeting higher demand than at the previous comparable sale. It was the first time a two-year issue had been sold with a negative yield.

The auction attracted bids worth 2.0 times the amount on offer compared with an average of 1.87 at other two-year auctions this year, according to Reuters data.

The average yield was -0.06 percent, compared with 0.1 percent last time and an average of 0.173 percent.


"There is no doubting that this was a strong auction and also that there is demand for German paper in negative yields. The auction should serve to give some of the yield-grab positions a pause for thought as, if investors are able to overcome the psychological problem of paying to lend money to Germany, then the Schatz is at risk of re-rating to a more normal level to the ECB deposit rate."


"Some institutions must hold safety assets because whatever the price, whatever the yield, they need it on their balance sheet and there are fewer safe havens globally. There's a large amount of liquidity in the global system and this is dragging yields down into negative territory.

"We are also in an environment where the market is expecting that after the ECB rate cuts it could deliver further and could even put the rate on the deposit facility into negative territory."


"It looked pretty decent. Given where the yield is you've got to say that it was a decent sale. Bid to cover looked pretty good. The amount retained shows you're not seeing the Bundesbank being required to mop everything up.

"The concession you've seen on spread versus other semi-core product, with the spread compression there, has left (the Schatz), I'm loath to say looking cheap, but on a relative basis they're offering more 'value' than they were a few weeks back."


"It is no surprise that we have negative yields at a two-year auction in Germany. We've seen yields not just in Germany but in other European countries as well move to negative territory following the ECB's decision to cut the deposit rate.

"Against that backdrop and with the economic picture looking so poor at the moment, yields could remain negative at the short end for some time to come and could even go further into negative territory in the near term."


- Shorter-dated German yields have fallen below zero since the European Central Bank cut its deposit rate to zero earlier this month. The knock-on effect has also pulled yields lower along the curve.

- Heavy coupon and redemption flows from triple-A rated euro zone issuers this month, coupled with demand for safe-haven assets as the debt crisis rumbles on, are also supporting German debt.

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Azannoth's picture

Yuropean Unity! LoooooooL!

Dr Benway's picture

Less than zero.. How fitting.

EscapeKey's picture

Swiss 2-yr @ -0.401

Danish 2-yr @ -0.317

Yet, according to our propaganda masters there is A BUBBLE IN GOLD EVERYONE!!!eleventyone11

fonzannoon's picture

Can we all agree now by the way that earnings are not what will take down this market? Enough of the earnings matter stuff. Also isn't it funny how the European debt crisis can just take a vacation? I did not know a panicked crisis can just take a vacation and nobody worries about countries abilities to fund their debt at these levels. It's interesting. Makes me think there is only a crisis when it's a good time to have one.

Dr. Engali's picture

The "crisis" is only needed at certain points when they want us to look one way so we can't see what is going on with the other hand. It's a tool of convenience.

fonzannoon's picture

Yeah you are right, I know how naive I sound but it's so blatantly obvious it just seems it needs to be pointed out sometimes.

TrainWreck1's picture

I'm genuinely curious as to just how low NIRPs can go.

-1%? -2%? even lower?


buzzsaw99's picture

Oil up 3X since 2000, gold up 5X+ in the same time. Of course gold is useful and oil isn't. ROFLMAO!

verum quod lies's picture

From even a half-ass economic perspective (i.e., non-Austrian) paying someone to borrow in real terms (and especially a government) seems downright insanity. But to pay someone to borrow even in nominal terms is what? Do we just call it “Keynesianism” and move on? If we survive, we will look back on these times and people will just laugh at some of the clearly insane things people did (and rationalized), like negative time value of money as rationalized by Nobel prize winners.


r00t61's picture

Won't be the last time.

We look back and laugh at the humans that believed in alchemy; the humans that believed that the sun rotated around the earth; the humans that believed in the 4-humor theory of physiological well-being.

Humans a thousand years from now will be laughing their heads off at us, I suspect.

Bubble's picture

I think they were actually paying for the right to buy a Deutchmark fwd

Dr. Engali's picture

"It looked pretty decent. Given where the yield is you've got to say that it was a decent sale. Bid to cover looked pretty good. The amount retained shows you're not seeing the Bundesbank being required to mop everything up."

Who pays for this kind of drivel? It's a negative yield you clown! I'd say that makes it more than "pretty decent". If I had a negative yield mortgage that pays itself off I'd be fricken ecstatic.

mark7's picture


Even if it were "Germany - England, football: 12-0", the comments from UK would be something like "Germany played quite well but our lads put up quite a fight in the second half". 

dvfco's picture

Good Dr. - The only way to improve on that one is to refer to the author as an 'ass-clown' rather than just a clown, or, as the Brits have been known to say - 'nob jockey' - otherwise, your commentary was brilliant.  


"Introducing the all new product guaranteed to never cause a housing crisis- the self-amortizing, zero-payment, mortgage.  Just don't die early or you'll miss all the fun!"

Boilermaker's picture

BAC beat estimates!!

BAC beat estimates!!

BAC beat estimates!!


mark7's picture

Scandinavian model: Money for less than nothing and chicks for free!

falak pema's picture

chicks for money is the czech model ! 

jover's picture

I wonder if this is a sign of added liquidity that will result in big inflation down the road?

falak pema's picture

ha, ha north europe a tax haven for hot money while peripherals burn. What is the logic there, except a cabal?

Scuttling the Titanic to squeak out a quick buck !

Headless HF chickens running crazy, deadly spiral in the financial courtyard! 

AU5K's picture

Pay me to hold your money, bitchez.

allocater's picture

So how much debt do we have to pile up at these rates to be debt-free???

canadiandollar's picture

talk to me like im a 2 year old. who in the hell is stupid and/or desperate enough to pay a country to borrow their money? truly this is the stuff of socialist fantasy where "usury" has become an antiquated ideology and the sewing of seeds for the garden of plenty have begun.

just where is the historical precedent for such a manipulation of the worlds capital and what is the half life of our entire economy at this rate?

dvfco's picture

"Uhm, today we at the Danish Minisistry of Finance, are offering 30 year (non-euro-denominated) bonds at a yield of -0.005% and will make available to the general public - As much as you are fucking stupid enough to buy - ahem - excuse me - but , for those willing to purchase in excess of one quadrillion Krona, we'll kick up the rate your being not-not paid to 0.00000%.  Thank you - your bids please . . . "

Any individuals or groups with offers to purchase exercised in excess of one quintillion krona will be offered citizenship, you will also receive all energy derived from one of those ugly windmills between our country and Sweeden, and any of the tiny little islands on the northwest coast.  Yes, we will handle evictions."

icetears's picture

It sounds like Alice in Wonderland, but in actuality is no altered from what happens in the money arrangement aural civic borders. If there is a abrupt address of basic from, say, Lancashire, the Bank of England will alarm on the consistent surplus accumulating abroad to bung the gap so as to ensure that the Lancashire cyberbanking arrangement can abide to armamentarium itself.

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