Austrian Treasury head Markus Stix must have been feeling rather tense last week, after daring to conduct a major experiment. For the first time, Austria’s debt management office sold a large federal bond that will not mature for 70 years.
Stress proved to be entirely unwarranted though, as the €2 billion ($2.22 billion) bond was heavily oversubscribed, with buy orders totaling €7.8 billion. This was despite the fact that the annual yield was only 1.5 percent.
“Ultra long-term bonds are on trend, and Austria has crowned it,” said Michael Leister, an interest rate strategist at German bank Commerzbank. This year the proportion of bonds with a maturity of 20 years or more has risen sharply, with 50-year bonds being issued in Belgium, France, Spain and Italy. However, no other euro zone country had issued a publicly-placed bond with a term longer than that until now. The only bonds with even longer maturities had been small 100-year bonds from Belgium and Ireland, placed with just a few private investors.