Investing in Eurobonds

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misterno
Posts: 478
Joined: Sat Mar 08, 2014 7:55 am

Investing in Eurobonds

Post by misterno » Thu Apr 19, 2018 2:48 pm

Some of my money is in Ally savings which has the highest interest rate for savings 1.75% and there is no penalty in early withdrawals

So the risk is zero there but I was willing to increase the risk just a bit not much and invest in something else and earn more maybe 2-3% at most

I found Eurobonds. After researaching a bit I came across to many 3rd world bonds maturing within a year.

http://bcsgm.com/bonds/charts/eng/cnt/em_chart.html

What are the chances of govt of Turkey to bankrupt within months and not paying its interest payments which in its history never happened?

If you look at the govt of Turkey eurobond which has the shortest duration to maturity, the yield is 2.96%/year.

I want to hear your thoughts on this.My goal is to park my cash only on a short term basis. Please assume that the yield below includes all the commissions and expenses

See the calculation below for one of the bonds maturing on 03/11/2019

Image

Valuethinker
Posts: 35958
Joined: Fri May 11, 2007 11:07 am

Re: Investing in Eurobonds

Post by Valuethinker » Thu Apr 19, 2018 4:03 pm

misterno wrote:
Thu Apr 19, 2018 2:48 pm
Some of my money is in Ally savings which has the highest interest rate for savings 1.75% and there is no penalty in early withdrawals

So the risk is zero there but I was willing to increase the risk just a bit not much and invest in something else and earn more maybe 2-3% at most

I found Eurobonds. After researaching a bit I came across to many 3rd world bonds maturing within a year.

http://bcsgm.com/bonds/charts/eng/cnt/em_chart.html

What are the chances of govt of Turkey to bankrupt within months and not paying its interest payments which in its history never happened?

If you look at the govt of Turkey eurobond which has the shortest duration to maturity, the yield is 2.96%/year.

I want to hear your thoughts on this.My goal is to park my cash only on a short term basis. Please assume that the yield below includes all the commissions and expenses

See the calculation below for one of the bonds maturing on 03/11/2019

Image
This strategy will work until it does not. Picking up nickels in front of bulldozers.

Mostly, most of the time, you will be OK.

BTW "Emerging Markets" and "Developing Countries". There's no 3rd World any more- -that term is obsolete.

BTW it's worth reading at least a summary (it was in today's Guardian, for example) about what the IMF is saying about world debt levels (sovereign and private).

misterno
Posts: 478
Joined: Sat Mar 08, 2014 7:55 am

Re: Investing in Eurobonds

Post by misterno » Thu Apr 19, 2018 4:29 pm

Valuethinker wrote:
Thu Apr 19, 2018 4:03 pm
misterno wrote:
Thu Apr 19, 2018 2:48 pm
Some of my money is in Ally savings which has the highest interest rate for savings 1.75% and there is no penalty in early withdrawals

So the risk is zero there but I was willing to increase the risk just a bit not much and invest in something else and earn more maybe 2-3% at most

I found Eurobonds. After researaching a bit I came across to many 3rd world bonds maturing within a year.

http://bcsgm.com/bonds/charts/eng/cnt/em_chart.html

What are the chances of govt of Turkey to bankrupt within months and not paying its interest payments which in its history never happened?

If you look at the govt of Turkey eurobond which has the shortest duration to maturity, the yield is 2.96%/year.

I want to hear your thoughts on this.My goal is to park my cash only on a short term basis. Please assume that the yield below includes all the commissions and expenses

See the calculation below for one of the bonds maturing on 03/11/2019

Image
This strategy will work until it does not. Picking up nickels in front of bulldozers.

Mostly, most of the time, you will be OK.

BTW "Emerging Markets" and "Developing Countries". There's no 3rd World any more- -that term is obsolete.

BTW it's worth reading at least a summary (it was in today's Guardian, for example) about what the IMF is saying about world debt levels (sovereign and private).
I like the yield and the risk but the problem is I was not able to find a broker that sells Eurobonds in USA

Valuethinker
Posts: 35958
Joined: Fri May 11, 2007 11:07 am

Re: Investing in Eurobonds

Post by Valuethinker » Fri Apr 20, 2018 12:12 pm

misterno wrote:
Thu Apr 19, 2018 4:29 pm
Valuethinker wrote:
Thu Apr 19, 2018 4:03 pm
misterno wrote:
Thu Apr 19, 2018 2:48 pm
Some of my money is in Ally savings which has the highest interest rate for savings 1.75% and there is no penalty in early withdrawals

So the risk is zero there but I was willing to increase the risk just a bit not much and invest in something else and earn more maybe 2-3% at most

I found Eurobonds. After researaching a bit I came across to many 3rd world bonds maturing within a year.

http://bcsgm.com/bonds/charts/eng/cnt/em_chart.html

What are the chances of govt of Turkey to bankrupt within months and not paying its interest payments which in its history never happened?

If you look at the govt of Turkey eurobond which has the shortest duration to maturity, the yield is 2.96%/year.

I want to hear your thoughts on this.My goal is to park my cash only on a short term basis. Please assume that the yield below includes all the commissions and expenses

See the calculation below for one of the bonds maturing on 03/11/2019

Image
This strategy will work until it does not. Picking up nickels in front of bulldozers.

Mostly, most of the time, you will be OK.

BTW "Emerging Markets" and "Developing Countries". There's no 3rd World any more- -that term is obsolete.

BTW it's worth reading at least a summary (it was in today's Guardian, for example) about what the IMF is saying about world debt levels (sovereign and private).
I like the yield and the risk but the problem is I was not able to find a broker that sells Eurobonds in USA
Probably because the issuer has not paid for the requisite US regulatory clearances to sell to individual investors?

Interactive Brokers seems to be the one Europeans use but no idea re USA. TD not do them?

https://www.quora.com/Can-I-buy-Bonds-o ... le_rich_qa

https://www.kiplinger.com/article/inves ... -luck.html
https://www.kiplinger.com/article/inves ... -luck.html
https://www.investopedia.com/articles/b ... l-bond.asp

https://www.forbes.com/sites/mitchelltu ... 09056c8e87

https://finance.zacks.com/buy-bonds-oth ... 11340.html

https://www.thebalance.com/best-brokers ... rs-4118308

misterno
Posts: 478
Joined: Sat Mar 08, 2014 7:55 am

Re: Investing in Eurobonds

Post by misterno » Fri Apr 20, 2018 2:26 pm

BTW the return should be alittle less than I posted previously

Because Eurobonds does not let you reinvest the interest payments and so here is the new yield

Image

zekevfab
Posts: 4
Joined: Wed Apr 18, 2018 12:39 pm

Re: Investing in Eurobonds

Post by zekevfab » Fri Apr 20, 2018 4:31 pm

Turkey has a credit rating is BB (junk bond).

The usual wisdom (Ben Graham and others) is that an individual investor should only invest in the prime bond market (high credit rating). You can see it this way: you are only going to make a marginal gain by investing into lower quality bonds compared to plain vanilla bonds (you gain only about 1%...) but are taking the risk of losing your principal. If you are willing to accept such a risk it is usually recommended to invest in the stock market, where you are typically much better rewarded for the same level of risk. Institutional investors are usually better equipped to invest in lower quality bonds than individual ones.

Valuethinker
Posts: 35958
Joined: Fri May 11, 2007 11:07 am

Re: Investing in Eurobonds

Post by Valuethinker » Fri Apr 20, 2018 4:46 pm

zekevfab wrote:
Fri Apr 20, 2018 4:31 pm
Turkey has a credit rating is BB (junk bond).

The usual wisdom (Ben Graham and others) is that an individual investor should only invest in the prime bond market (high credit rating). You can see it this way: you are only going to make a marginal gain by investing into lower quality bonds compared to plain vanilla bonds (you gain only about 1%...) but are taking the risk of losing your principal. If you are willing to accept such a risk it is usually recommended to invest in the stock market, where you are typically much better rewarded for the same level of risk. Institutional investors are usually better equipped to invest in lower quality bonds than individual ones.
People believe, or do not believe, that line of argument here.

It depends on whether you think credit risk is a separate portfolio factor (from size, value, term, etc.) and can be profited from in terms of exposure (Rick Ferri's argument). Larry Swedroe's argument is yours.

There are EM bond funds- -both government, and perhaps now corporate EM bonds? There's ways of playing the EM way that don't expose the investor to issue specific risk (which, theory says, should be uncompensated risk).

misterno
Posts: 478
Joined: Sat Mar 08, 2014 7:55 am

Re: Investing in Eurobonds

Post by misterno » Mon Aug 27, 2018 3:14 pm

I decided to go head and purchase some Turkish bank eurobonds which will expire in 40 days and with an annualized yield of %15

Here is the CUSIP XS0808632250

I called Fidelity and they said the name of this product says REG S which means US citizens are prohibited from buying it

So then I checked all CUSIPS in the below list and all the names have REG S next to them.

https://www.isyatirim.com.tr/tr-tr/anal ... 8534_1.pdf

I am not sure how any American can buy a Eurobond in this case? Or am I missing something?

Here is the link for the correct name

https://markets.businessinsider.com/bon ... 0982644774

Any ideas?

hdas
Posts: 227
Joined: Thu Jun 11, 2015 8:24 am

Re: Investing in Eurobonds

Post by hdas » Mon Aug 27, 2018 4:32 pm

Aside from bloomberg, this is the best resource I've found for foreign bonds related stuff.

Link: http://cbonds.com/bondsearch/

Cheers :greedy

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