Imagine borrowing CHF 105,500 but only having to repay CHF 100,000 in 20 years time, including interest. You’d get an interest free loan plus an extra CHF 5,500 to keep.
![Swiss government gets paid to borrow](https://i1.wp.com/lenews.ch/wp-content/uploads/2019/12/Swiss-government-bonds_©-Radomír-Režný-_-Dreamstime.com_.jpg?fit=600%2C400&ssl=1)
This is what the Swiss federal government will do on 20 December 2019, except it will borrow CHF 196.6 million by issuing zero interest bonds at a price of 105.5%. The government will generate a CHF 10.25 million windfall.
In addition, investors interested in this issue of zero-interest bonds got fewer than they wanted. CHF 329.6 million sought a slice of the CHF 196.6 million issue.
This is the 14th time the Swiss Confederation has managed to issue loss-making bonds since 2010. The first lot were issued in June 2016.
On 2 December 2019, the Swiss Confederation had nearly CHF 61 billion of outstanding bonds at an average rate of interest of 2.2%. Some of the bonds are not repayable until 2064.
At the end of 2018, bonds made up 80% of the CHF 81 billion owned by the Swiss federal government. Average bond maturity was 10.6 years.
More on this:
Federal Finance Administration data (in English)
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