Comment by roberdam
Comment by roberdam 4 days ago
11% is a safe interest rate on my country (py), I just got a 14.5% offer for local bonds BBB+
Comment by roberdam 4 days ago
11% is a safe interest rate on my country (py), I just got a 14.5% offer for local bonds BBB+
So, bonds basically all tend to converge on the same risk adjusted yield. If you're seeing yields that look like this, the market believes the currency will slip or there's repayment risk (relative to USD bonds that are in the 4.75% range.)
Imagine you have a scenario where inflation is 0 in currency A and 10% in currency B. Would you rather have a 2% bond in currency A or a 9% bond in currency B? This is why Euro bonds go negative sometimes, when USD interest rates were very low and the Euro was deflationary relative to the dollar, it could push rates even further lower.
I wrote an article (it's in Spanish) in which I took data from the central bank since 1990 and created a tool to simulate various scenarios. The tool includes a column showing the average interest rates on central bank-backed investments. Maybe you might find it interesting. https://roberdam.com/jubilar.html
It's not an inherent feature, but they steer it in such a way so, no, there isn't (at least not for long), unless someone would make a good case for it at some point in the future
The interesting question would be what their currency, where this 11% is offered, typically loses year-on-year
stay vigilant Lebanon was granting 12% rates and everything was fine and “covered” by central bank until it wasnt