I know the theory, arbitrage shouldn't be possible, so if a foriegn government is paying 10% coupons on their 10 year bonds, their currency should end up being devalued against the US. That, or they have significant credit risk.
Given the current low yield environment, bonds in some countries (say Indonesia), look very appealing. 8.73% yield on 30 year government bonds.
My outlook in general for those bonds is that they are a really good deal. Even if the currency goes down a bit, and even if Indonesia defaults in 15 years, it still seems you'll come out ahead of treasuries.
Anybody have any real world research / history on why that's a stupid plan?
(If I could earn 6.25% indexed to inflation I would never have to work again. In practice I'm too risk adverse to quit to live of coupons on Indonesian government debt, but, it seems like a promising place to park around 25% of liquid assets to get a huge yield pick up over like the 2% I can get in GICs these days).
Given the current low yield environment, bonds in some countries (say Indonesia), look very appealing. 8.73% yield on 30 year government bonds.
My outlook in general for those bonds is that they are a really good deal. Even if the currency goes down a bit, and even if Indonesia defaults in 15 years, it still seems you'll come out ahead of treasuries.
Anybody have any real world research / history on why that's a stupid plan?
(If I could earn 6.25% indexed to inflation I would never have to work again. In practice I'm too risk adverse to quit to live of coupons on Indonesian government debt, but, it seems like a promising place to park around 25% of liquid assets to get a huge yield pick up over like the 2% I can get in GICs these days).
Investing in high yield government debt.
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