HALISTER1: Falling Yields Depriving Investors of More Than $500b: Fitch

Falling Yields Depriving Investors of More Than $500b: Fitch

(Bloomberg) -- Investors are foregoing more than $500b in annual income on $38t in currently outstanding sovereign bonds, relative to yield available in 2011, Fitch strategists Robert Grossman, Bill Warlick and Jonathan Boise said in note.
  • Median 10Y yield for 34 large investment-grade sovereigns in Fitch study dropped to 1.17% from 3.87% in July 2011
  • Because of global monetary stimulus, cash flow benefits have been transferred to sovereign issuers from investors
    • Largest declines in weighted avg sovereign yields in past 5yrs: Spain -422bps, Italy -413bps
  • Should global rates remain low for extended time, it would “likely erode earnings power” at many large institutions and pension funds
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Robert Grossman (Fitch Group Inc)
William Warlick (Fitch Ratings Ltd)
Jonathan Boise (Fitch Ratings Ltd)

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