Sovereign bond returns

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SlowMovingInvestor
Posts: 1035
Joined: Sun Sep 11, 2016 11:27 am

Sovereign bond returns

Post by SlowMovingInvestor » Sat Feb 09, 2019 1:39 pm

Article on sovereign bonds over the last 200 years.

https://www.bloomberg.com/opinion/artic ... nd=premium

Perhaps the key finding is .. the more defaults a country has suffered, the better total returns investors have enjoyed.
..the bonds of “serial defaulters” have succeeded in paying more than U.S. Treasuries or U.K. gilts,
..
Judged as an asset class, this adds up to the remarkable finding that external government bonds have managed to perform almost as well for investors as equities of U.S. companies, and better than other significant asset classes.


The big counterexample cited is Russia after 1917 :)

I do hold a little EMB and it has generally done reasonably.

CarpeDiem22
Posts: 166
Joined: Tue May 22, 2018 11:20 pm

Re: Sovereign bond returns

Post by CarpeDiem22 » Sun Feb 10, 2019 5:53 am

It would be logical to think that if a country is prone to sovereign defaults, it has to pay higher interest to attract investors. Not surprising I'd say.

Valuethinker
Posts: 37272
Joined: Fri May 11, 2007 11:07 am

Re: Sovereign bond returns

Post by Valuethinker » Sun Feb 10, 2019 9:37 am

CarpeDiem22 wrote:
Sun Feb 10, 2019 5:53 am
It would be logical to think that if a country is prone to sovereign defaults, it has to pay higher interest to attract investors. Not surprising I'd say.
perhaps risky sovereign debt has a correlation with equity risk?

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