Saturday, September 21st, 2019 MST

Junk bonds with negative yields

It’s crazy enough when government debt sells at negative yields.  But there are 14 junk bond issues in the eurozone trading at subzero rates.

Junk bonds are just what they sound like: junk — high risk issues which may not even payback the principal.  They should yield 5% to 8% over Treasuries, if not more.

Bloomberg says that worldwide in excess of $13 trillion of debt trades with negative interest rates, mostly government issues.  But now, even corporate debt is trading at negative yields.

Apparently, the craziness listed below has incepted just since the beginning of 2019. In any event, here is the subzero junk:

  • Ardagh Packaging Finance plc /Ardagh Holdings USA Inc.
  • Altice Luxembourg SA
  • Altice France SA
  • Axalta Coating Systems LLC
  • Constellium NV
  • Arena Luxembourg Finance Sarl
  • EC Finance Plc
  • Nexi Capital SpA
  • Nokia Corp.
  • LSF10 Wolverine Investments SCA
  • Smurfit Kappa Acquisitions ULC
  • OI European Group BV
  • Becton Dickinson Euro Finance Sarl
  • WMG Acquisition Corp.

The world’s central banks have printed so much money that the world is awash in it.  And, it has to go somewhere, and that somewhere is mostly in bonds, which are more secure than stocks because bond holders have first dibs if the corporation is liquidated.

Even John Maynard Keynes could not have imagined a world in which bonds yielded negative rates.  There is no doubt that much of the printed money since 2008 went into hedge funds that have funded enterprises (Uber, Tesla, Amazon are likely candidates) that are delivering products and services below their real costs.  As this economy slows, those malinvestments will surface and result in precipitous fall in stock prices.  Historically, gold and silver have been classic hedges against this kind monetary insanity

See our Gold Specials Page and Silver Specials Page for some real precious metals bargains.

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