Britain borrows at negative interest rate for first time

Britain sold a government bond with a negative yield for the first time on Wednesday, meaning the government is effectively being rewarded for borrowing after investors agreed to be repaid slightly less than they lent.

It joins Japan, Germany and some other European countries in selling debt yielding less than 0%, reflecting the prospect the coronavirus pandemic will cause a severe global recession and bond-buying by central banks to mitigate its impact.

Wednesday’s auction saw 3.75 billion pounds ($4.6 billion) of gilts maturing in July 2023 GBT0T23= sold at an average yield of -0.003%.

While investors will receive annual interest of 0.75%, they paid above face value for the bond so the cash return will be less than they have lent if they hold the debt to maturity.