3: why do investors buy negative yielding bonds?

6: governments around the world have

10: recently got into the habit of issuing

13: negative yielding debt, essentially

15: borrowing money from investors and

17: asking to be paid for it. the total value

20: of bonds with negative yields is now

22: estimated at around 13 trillion dollars.

26: buying such debt and holding it to

29: maturity is a guaranteed way of losing

32: money so who is buying it and why?

36: Some investors such as banks pension funds

39: and insurers are compelled to buy the

42: less attractive debt due to various

44: regulations. they are therefore forced to

47: swallow the negative rates.

50: Other investors are buying out of pure

52: desperation. when looking at how poorly

55: other forms of fixed income have

58: performed they are prepared to take a

60: guaranteed small loss on the bonds

62: rather than risk a much big one

65: elsewhere. the final set of investors are

68: much happier. They sense a way of actually

72: making money. some are buying the debt of

75: foreign countries and hoping that

77: currency movements will turn their

79: negative yielding bonds into profitable

82: returns. others hope that negative

85: yielding debt bought from governments

87: that suffer deflation will actually

90: produce positive real or

92: inflation-adjusted returns in the long

95: term.

96: finally bond yields move inversely to

99: prices and some investors believe that

102: yields will actually fall further

104: meaning the price of the bonds they hold

107: will rise and they can make a capital

110: gain by selling them. but for less

113: adventurous investors the mounting piles

116: of negative yielding bonds are anything

118: but positive.