There's $11.7 trillion of bonds that are doing something bizarre

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Luke MacGregor/Reuters

Dressed as Spiderman, Alfie Morrison, 4, is reflected as he poses on Argentine artist Leonardo Erlich's optical illusion installation "Dalston House" in east London June 26, 2013.

The ocean of negative yielding bonds is growing ever bigger.

According to analysis by credit rating agency Fitch Ratings, there are now $11.7 trillion worth of negative yielding bonds in the market following the UK's vote to leave the European Union. That's $1.3 trillion higher than May.

When a bond is negative yielding, it means you'll get less back when the debt is due than you pay for it today. Investors are buying these because despite the prospect of losing money, they're still considered the safest place to park funds when markets are being roiled like they have been in the past week.

The uncertainty surrounding the UK's exit from the European Union has sent investors fleeing into safe assets, and this increased demand has brought yields down.

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"Brexit-related concerns drove more long-dated bond yields negative, with particularly big shifts in German, French and Japanese yield curves during June," said Robert Grossman, head of macro credit at Fitch, in a note to clients Wednesday.

While Japan still lead the pack in terms of total negative-yielding debt, the eurozone nations passed significant milestones over the last few days.

"Japanese government bonds (JGBs) continue to represent about two-thirds of the global total ($7.9 trillion), while Germany and France each now have over $1 trillion in sovereign debt with sub-zero yields," said Grossman.

"Japan's negative-yielding debt total grew by about 18% during the month, while Germany and France's total grew by 8% and 13%, respectively."

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According to Grossman, this is driving the desperate reach for yield for income-oriented investors.

"The increasing amount of long-term negative-yielding debt underscores the challenges faced by large bond investors such as insurance companies that need to match long-term liabilities with similar maturity assets," he wrote. "As more of the global universe of safe assets drops into negative-yielding territory, income for these investors continues to fall."

Going forward, it doesn't appear as if the number of negative yielding bonds as uncertainty over the future of the EU abound and central banks don't seem in a hurry to raise interest rates anytime soon.

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