Poland pulls emerging markets into sub-zero sovereign club

LONDON, Feb 3 (Reuters) - Poland became the first emerging market country to sell a mainstream government bond with a sub-zero interest rate on Monday, marking another major milestone in the post-crisis plunge in global borrowing costs.

Eastern Europe’s biggest economy sold a 1.5 billion euro, five-year bond which once pricing was finalised gave buyers a yield of -0.102%.

A sub-zero yield, common in some major sovereign bond markets after years of negative central bank interest rates, effectively means the buyer is paying for the privilege of owning debt considered low-risk. “It is a milestone that I have been waiting a long time for,” said Pictet Asset Management’s Guido Chamorro. “Emerging markets are joining the negative-yield club.”

Many of Poland’s existing bonds trade at negative yields in secondary markets thanks to the neighbouring euro zone’s deeply sub-zero rates, but to date no mainstream emerging market government bond has been sold with one.

The Polish sale also comes after the flight to safety caused by coronavirus worries have pushed the global universe of negative yielding bonds back up to almost $14 trillion. (Reporting by Marc Jones; Additional reporting by Yoruk Bahceli and Dhara Ranasinghe; Editing by Catherine Evans)