This week, investors started paying for the privilege of holdingFinnish government bonds that won't mature for another decade.

Finland, the Nordic region's worst-performing economy, is nowthe only non-AAA issuer in Europe with a negative 10-year yield.Creditors seem uninterested in what the ratings companiesthink.

Ten-year yields on German, Swiss, Dutch, and Danishgovernment bonds, already negative, have traded lower this week.Finland crossed the zero threshold to join the club on Tuesday asthe bond market runs out of top-rated sovereign assets to hoard.Euro-zone bonds are also benefiting from the European CentralBank's asset purchase program.

“In the short term, the issues surrounding Deutsche Bank, andbroader concerns about the banking sector, have triggered demandfor safe haven bonds, and this has pushed down Finnish yields,”said Jan von Gerich, chief analyst at Nordea in Finland.“Deutsche's problems have driven down yields, but in the bigpicture, Deutsche is just one of the symptoms.”

The fact that Finland is no longer a top-rated issuer issecondary because “trust in credit ratings faded long ago,” vonGerich said. “Many investors have relaxed their criteria for creditratings” and there are “bound to be fewer investors who stillrequire an asset to be AAA than used to be the case.”

While acknowledging that lower rates are of course “positive”for state coffers, Finland's Prime Minister, Juha Sipila, alsoexpressed unease at the development.

“I hope this will turn positive, because it's not normal,”Sipila told Bloomberg. “But of course, it's a good thing for thestate budget.”

Among euro nations without a AAA rating, “Finland is thestrongest,” according to Juhana Brotherus, chief economist atHelsinki-based housing credit institution, HYPO. Though Finland hasfailed to stay within the EU's requirement to limit public debt to60 percent of GDP, “when international investors compare us toothers,” what they see is “not as worrying” as debt levelselsewhere in Europe, he said.

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