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Negative interest rates: Siemens borrows billions - but still gets out money

2019-09-06T12:25:31.505Z


Thanks to low interest rates: Siemens has issued several bonds and thus still earns some money. The demand of investors was enormous.



Siemens earns money by borrowing. Bonds over 3.5 billion euros to some negative returns have spent the company, said Siemens. These are papers with maturities of two, five, ten and fifteen years.

Investors' demand was more than four times as high as supply, and some of it paid off: the two-year bond had a return of minus 0.315 percent on the issue, and the five-year one had a minus of 0.207 percent, the company said. Only with the longer terms does Siemens pay investors some money. The Group has thus financed as cheap as never, said CFO Ralf Thomas.

Typically, companies have to pay investors interest if they raise money on bonds on the capital market. But with interest rates that have been low for a long time, conditions have reversed: large investors, who have to invest a lot of money in bonds because of their investment regulations, are pushing into the market in search of yield. They settle for less and less interest - or even pay.

If investors hold papers with negative returns until maturity, they lose money. But they insist that interest rates continue to fall - then their bonds rise in price. The German state also earns money by issuing federal bonds.

Source: spiegel

All business articles on 2019-09-06

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