what is a negative bond yield 
a negative bond yield is when an investor receives less money at the bond s maturity than the original purchase price for the bond a negative bond yield is an unusual situation in which issuers of debt are paid to borrow in other words the depositors or buyers of bonds are effectively paying the bond issuer a net amount at maturity instead of earning a return through interest income understanding negative bond yieldsbonds are debt instruments typically issued by corporations and governments to raise money investors purchase the bonds at their face value which is the principal amount invested in return investors typically get paid an interest rate called the coupon rate for holding the bond each bond has a maturity date which is when the investor gets paid back the principal amount that was initially invested or the face value of the bond bonds that have been previously issued and sold by investors before the maturity trade on the secondary market called the bond market bond prices rise and fall depending on various economic and monetary conditions in an economy the initial price of a bond is usually its face value which could be 100 or 1 000 per bond however the bond market could price the bond differently depending on a number of factors which could include economic conditions the supply and demand for bonds the length of time until expiration and the credit quality of the issuing entity as a result an investor might not receive the face value of the bond when they sell it typically an investor might buy a bond at a 95 for example and receive the 100 face value at maturity in other words the investor would ve bought the bond at a discount 95 to the face value 100 negative yielding bonds would result in an investor receiving less back at maturity meaning an investor might pay 102 for the bond and get back 100 at maturity however the coupon rate or interest rate paid by the bond also plays into whether the bond is negative yielding bonds trading in the open market can effectively carry a negative bond yield if the price of the bond trades at a sufficient premium remember that a bond s price moves inversely with its yield or interest rate the higher the price of a bond the lower the yield the reason for the inverse relationship between price and yield is due in part to bonds being fixed rate investments investors might sell their bonds if it s expected that interest rates will rise in the coming months and opt for the higher rate bonds later on conversely bond investors might buy bonds driving the prices higher if they believe interest rates will fall in the future because existing fixed rate bonds will have a higher rate or yield in other words when bond prices are rising investors expect lower rates in the market which increases demand for previously issued fixed rate bonds because of their higher yields at some point the price of a bond can increase sufficiently to imply a negative yield for the purchaser 