On 28 December 2018, Italy issued government bonds maturing in 2028 at an effective interest rate of 2.7%1. Interest rates like this combined with the scale of Italian public debt (157% of GDP) mean Italian taxpayers spend more on public debt interest than they do on education. In 2015, Italy spent 4.1% of GDP on public debt interest and only 2.8% of GDP on education.
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This week, Switzerland issued bonds maturing in 2030 at an effective interest rate of -0.041%2. Negative interest rates like this mean Switzerland sometimes makes money borrowing.
Buyers of Swiss bonds are reckoning on the stability of the Swiss franc and the near certainty of repayment.
More on this:
Swiss National Bank announcement (in French) – Take a 5 minute French test now
1 Italian public bonds maturing on 01.12.2028 with a coupon of 2.8% were sold at a price of 101.04% on 28 December 2018.
2 Public bonds of the Swiss Confederation maturing on 27.05.2030 with a coupon of 0.5% were sold at a price of 106.15% on 9 January 2019.
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