Investors are now paying for the privilege of lending their money to companies, a fresh sign of how aggressive central-bank policy is upending conventional patterns in finance.
German consumer-products company Henkel AG and French drugmaker Sanofi SA each sold no-interest bonds at a premium to their face value Tuesday. That means investors are paying more for the bonds than they will get back when the bonds mature in the next few years. …
“We’re trying to get our heads around it,” Edward Farley, head of European corporate bonds at PGIM Fixed Income, said of Tuesday’s deals. “It seems pretty bizarre to ask a corporate to look after your money and give you back less in two to three years’ time.”
Commentary by Lynette Zang:
While I’m not fully prepared to say the market break is occurring right now, there has been a global shift in government bond interest rates. If this persists, if central bankers cannot push interest rates down with all their QE bond buying, then I’ll be prepared to say… game over .
Just realize, this insanity cannot last forever.