Funds were the biggest buyers of thefirst negative-yielding euro bonds sold by anon-financial company, highlighting how central bank stimulusis distorting markets.

Deutsche Bahn AG allocated 57% of the 350-million euro ($388million) bond sale to funds, while banks bought 23%, according to aperson familiar with the matter who asked not to be identifiedbecause they aren't authorized to discuss the offering. Investorsin Germany and Austria bought most of the bonds.

Investors in the state-owned German rail operator willeffectively pay to lend to the company after its bonds were sold toyield minus 0.006% on Tuesday. Yields on more than $10 trillion ofsovereign and investment-grade corporate bonds have been driven tozero or below as central bank efforts to boost their economiesinflate asset prices.