Austria, a country which itself is less than 100 years old, made European history today when it launched a 100-year government bond: the first such deal to be sold into eurozone public markets. While Austria is not the first nation to sell 100 year bonds – last year Ireland and Belgium both sold privately-placed century-long bonds – while Austria itself sold a 70 year bond, Austria’s planned 100-year bond is unique in that it would be the first such debt sold directly into public markets in the eurozone according to the WSJ.
It is unclear if the lack of a private sale suggests there was no reverse inquiry for the high duration product among institutions, however the return of this highly convex and duration-laden instrument suggests that European yields are unlikely to shoot higher, at least judging by the anticipated demand. On the other hand, yields are about to spike from the perspective of Austria, which is simply seeking to lock in the longest-possible term financing before the ECB begins tapering/tightening, and yields spike, as Fasanara Capital warned yesterday.
This post was published at Zero Hedge on Sep 12, 2017.
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