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Negative Yield Bond

Updated on March 17, 2023

Negative Yield Bonds are bonds where investors actually lose money instead of making good stable returns. Such bonds sell at a high premium in the market which makes the net returns from these bonds negative at the time of redemption.

Why do investors buy negative yield bonds?

Despite the getting negative yield, the most obvious question is why investors invest in negative yield bonds. Reasons for the same are highlighted below.

Safer investment options as compared to volatile investment options especially in economic uncertainty scenarios.

Investment by mutual funds in these assets as part of their asset allocation format and to hedge risk from other investments.

Anticipation of benefit from currency exchange fluctuations despite negative yield from bonds.
Retail investors may prefer negative yield bonds as a better source to use their savings