The German state profited from incurring more debt in the first half of this year, a newspaper report showed on Monday.

State bonds issued with negative interest rates flushed around 1.5 billion euros ($1.68 billion) into federal coffers, as total interest spending dropped from 9.7 to seven billion, the "Bild" daily reported.

German government bonds with a maturity of up to 10 years currently carry a negative interest rate, which means investors, who would traditionally expect a return on their investment, actually pay to own them.

In July, Germany first issued a 10-year-bond with sub-zero interest, while it has already made money from securities with a shorter maturity before.

Cautious investors and a large buyer

Amid increasingly volatile financial markets - rocked for instance by Brexit woes and reeling Italian banks - investors increasingly look to park their cash in safe havens.

German state bonds enjoy a top-notch credit rating and have long been considered a rock-solid option - so much so that buyers now purchase them, even if it comes at a price.

Also, the European Central Bank (ECB) has been buying up sovereign debt on a large scale for some time in a program dubbed quantitative easing.

It is supposed to kick-start stalling eurozone economies and push up inflation. But it also drives down state bond interest rates.

mrk/hg (AFP, Reuters)