This is nuts, when's the maturity?

It's that time of the century again.

Nearly two years ago, Austria borrowed €3.5bn for 100 years through what was then the largest ever syndicated century bond issue, at a yield of 2.1 per cent.

It's currently yielding 1.1 per cent. And Austria, apparently, will soon be back for more; Bloomberg and Reuters report that the country is "exploring" the possibility of selling 100-year debt alongside a new 5 year bond.

One of the issues with long-dated bonds is the question of how long it would take to get your money back. The 8 per cent yield on Argentina's 100-year bond, for example, meant investors would, in the absence of a default, receive their money back in a reasonable time period - i.e., within the duration of their own lives.

That's obviously not the case with the old, or the prospective new, Austrian bond(s).

We should clarify that this is nuts in the sense that structural factors on the buyside lead to ostensible absurdities, or in the sense that the interest rate environment in the eurozone is unprecedented, rather than nuts in the sense that this bond is objectively a bad asset to buy.

That latter question is relative to vaguely comparable things, like the German 10 year Bund, which is back at a new lowest-level-of-all-time-level of -0.33 per cent. This recent wave of record-low yields has come alongside the disproved the end of QE net purchases.

In other words, if you hold to maturity, there are no number of lifetimes in which you recoup your initial capital. You just lose less than you might elsewhere, which, conceivably, is a kind of gain, depending on what happens to everyone else.

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