FILE PHOTO: 20 Euro banknotes are displayed is this picture illustration taken November 14, 2017. REUTERS/Benoit Tessier/Illustration
And if their bond yields fall below zero, effectively charging investors for the privilege of lending them 10-year cash, debt service calculations could be revised down even further. And by end-2022, it is expected to accrue savings of over 16 billion euros versus S&P calculations prior to the pandemic.
And once you factor in dividends national central banks pay to their governments on their holdings of the bonds, “then the actual cost of the debt is de facto zero. By that metric, it costs nothing to issue this debt.”The moves may dismay those who saw Spanish and Portuguese debt as a higher-yield alternative to Germany and France.
“Even if you thought that over the longer-term, the debt was too high, it’s really not the time to take that on the longer-term view.” As investors flock to longer maturities, yields will fall faster than at the short end, Saxo Bank strategist Althea Spinozzi predicted in a note.
None of these citizens could decide about this. And they won't see a dime of it because the money will vanish in the hands of a few, off-shore.
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