Britain began the sale of government bonds with an average yield of -0.003 percent on Wednesday, the Financial Post has reported, citing market data.
Demand for the bonds, known as gilts, was said to have been lower than usual, although bidding outstripped the available £3.75 billion ($4.59 billion US) by over 100 percent. The medium-term bonds will mature just over three years from now in July 2023.
Short-term UK government bonds first turned negative in March as investors rushed to safety amid the turmoil faced by the stock market over coronavirus-related jitters. The Bank of England cut its main interest rate to 0.1 percent at the time, a record low, and announced £200 billion in bond purchases.
Wednesday’s bond issuance followed the sale of £3.25 billion in five-year government bonds at then record-low yields of less than 0.02 percent earlier this month.
Up to now, the UK government bond market has been unique compared with other developed nations such as Japan, Germany and other European countries, in that the British government has never offered medium- to long-term bond yields of less than zero.
The bonds are expected to help London deal with the continuing global financial and economic consequences of the coronavirus crisis.
Last week, the United Nations said it expected the coronavirus crisis to slash global economic output by $8.5 trillion over the next two years, with the world economy expected to contract by 3.2 percent in 2020, while over 34 million people may be pushed into extreme poverty as nations struggle to reopen their economies after months of ham-fisted lockdowns.