Who wants to sign this contract with me? You give me $1000 today, and then I'll give you back $990 in three years. There are $15 trillion dollars worth of contracts like this - Right, Now.
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They are paying large premiums (assured losses) to avoid risk. Happens all the time in third world countries but now it's finance in general.
Also, there are often legal requirements for pensions and central banks to hold certain classes of "low risk" bonds, especially sovereign bonds. Also force of habit. Tons of distortion in financial markets from these obsolete and bubble-chasing practices.
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AND...when those "low risk" bonds get re-rated to a lower classification, pension funds in the U.S. <b>MUST<b> liquidate the position according to new laws that were past since 2008. Nothing spells illiquidity like forced selling.
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Don't worry, everybody knows and can only know vastly less than the actual complexity of the financial world. Only the pseudoscientists pretend otherwise.
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Nothing like the calm of a master to soothe the soldiers soul.
End of conversation
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Even though there is negative Sovereign debt, I don’t think you can borrow money at a negative rate.
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They are not “bubble-chasing practices” for obvious reason there are no profits. Nor are they habit because they exploded recently. Some other reason is behind it and the answer lies in the old dusty books from 19 century economists debating ”general glut”.
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