Bond markets have sold off globally, but there's an odd duck standout: the negative-yielding, Swiss-franc-denominated bond recently sold by Poland.
The bond was already a bit iconoclastic. Several developed markets, including Switzerland and Germany, had been getting paid to borrow money for a while, but Poland became the first emerging market to sell a negative yielding bond last week, raising around 580 million Swiss francs (558.7 million euros or $635 million) in a three-year issue that yielded a negative 0.213 percent.
But while the bond selloff last week saw some negative-yield issuers return to positive-land, Poland's bond price hasn't budged much. Switzerland's benchmark 10-year bond was yielding a minus 0.184 percent on April 20, but that turned to a positive 0.132 percent Thursday.
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Poland's three-year Swiss-franc bond yield hit a high of negative 0.143 percent last week, but was around negative 0.172 percent late Thursday. Bond prices move inversely to yields.
Poland has certainly managed to hit a sweet spot in bond demand, tapping buyers scrambling not just for Swiss franc-denominated issues, but also for Eastern European assets.
"[It's] just exploiting the investors desperate [enough] to accept comparatively low returns," said Markus Allenspach, head of fixed income research at Bank Julius Baer. He noted that institutional investors and banks need to fulfill their liquidity ratios and a franc-denominated sovereign-bond can fill the bill, even at a negative-yield.