I just lifted this off Howard Marks' latest memo, it really makes you think about our current attitude to risk

I’ll make reference to $2.75 billion of bonds that were issued by Argentina in mid-June.  The maturity was 100 years – “century bonds” – and the interest rate was 8%

You might have thought this would be a hard thing to sell.  After all, Argentina had defaulted on its debts eight times in its 200-year history, with no fewer than five defaults in the past century alone, most recently in 2014 amid a legal dispute with the Elliott hedge fund. . . . 

But investors do not seem to care: there were $9.75bn of bids.  And Argentina is not the only peculiar event in bond markets this month.  Take a look, for example, at Ivory Coast.  In recent weeks, this West African nation underwent yet another military uprising.  But this month it sold 16-year bonds with a 6.25 per cent yield – and these were also heavily oversubscribed.  Places such as Senegal and Egypt have also seen hot demand for their debt.  (Financial Times, June 27)

Finish reading with a 14 day trial

or Unlock with your email

Already have an account?
Login here