FRANKFURT, March 20 Foreign investors sold euro
zone debt for the first time since 1999 last year while domestic
buyers took money abroad, fleeing ultra-low yields and rising
fears of a euro break-up, European Central Bank data showed on
It suggested investors were taking advantage of the ECB's
bond purchases to sell out of the euro zone rather than seek
higher returns within the area, as Frankfurt was hoping when it
launched its 2.3-trillion-euro stimulus programme.
Investors from outside the euro zone sold a net 192 billion
euros worth of its debt, mostly government and bank bonds, and
more than halved their net purchases of euro zone stocks from
the year before, the ECB data showed.
Domestic investors, meanwhile, bought a net 364 billion
euros of debt from outside the currency area, only sightly below
the previous year's record high.
The Frankfurt-based central bank blamed the outflows on
lower bond yields in the euro area than abroad and Britain's
vote to leave the European Union, which has rekindled worries
about the survival of the European project.
"The persistently negative interest rate differentials
vis-à-vis other advanced economies were an important determinant
of net portfolio debt outflows in 2016," the ECB said.
"Moreover, these estimates suggest that investors' risk
aversion contributed somewhat to net portfolio debt outflows in
the second half of 2016, which may be linked to ... the United
Kingdom’s referendum on EU membership in June 2016."
Ironically, Britain's share of the foreign debt bought by
euro zone investors grew in the second and third quarter of last
year to make it the second-largest destination after the United
Fears of a euro break-up have risen to their highest since
2012, according to a gauge risk compiled by Thomson Reuters
financial information service IFR and based on the cost of
insuring against the defaults of different countries. To see a
This spring's presidential elections in France, where
nationalist candidate Marine Le Pen is expected to get to the
second round, are seen as a key source of uncertainty by
investors. Germans will also go to the polls in September.
(Reporting by Francesco Canepa; editing by Mark Heinrich)