A bond pays 1$ a year and trades at 9999999$.
Positive yield. (negative real rate, but that s not the point)
to put it simple, you juss overpay for a bond above its coupon and par value (PV of course). say for example 1000 par 10% annual coupon for 1 year. so das worth like 1100 end of year. let say you pay 1101 at inception. boom negative yield. ppl will do negative yields when they anticipate deflation. The funny part is, people can easily juss put money in a safe or under a mattress, but unless the fear they might be robbed, then they overpay for the bond for security purposess. if bank deposits go negative. corporate can go negative as well albeit less negative than bank deposits… but its all paying for security. an example would be me receiving 10k in cash. i personally do not feel comfortable having that kind of cash around the house so i would try to deposit it in a bank even if they charge me to depsoit it. Its not all that crazy. when everyone is unemployed and pessimistic, people go crazy.
All the Nestle bonds I’ve looked up have positive nominal yields
OP,
Post the CUSIP or this is hearsay
^ Its apparently an Oct16 EUR per news reports. I probably won’t have time to dig on Bloomberg today, maybe another enterprising member can.
^
“That sent yields, which move inversely to prices, on a Nestlé four-year, euro-denominated bond, which matures in 2016, to minus 0.008 per cent.”
http://www.ft.com/cms/s/0/4b5c16a8-abcb-11e4-b05a-00144feab7de.html#axzz3S890uMBW