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Strategies & Market Trends : Heinz Blasnik- Views You Can Use -- Ignore unavailable to you. Want to Upgrade?

To: John Doyle who wrote (3681)	11/1/2003 11:17:29 AM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 4914

i don't know what Heinz would say, but FWIW, i will offer my experience as a US-based investor w/r/t non-USD debt. of course, it has no bearing on anyone else's situation, but fwiw it's what i'm doing... i have purchased sovereign bonds of Australia, Queensland (QTCs), New Zealand, Canada, and euro-denominated German bonds (Eurobunds). i bought all these bonds directly through my broker. the minimum for each purchase was 100,000 face (e.g., 100,000 euros, Australian Dollars, etc.). w/r/t euros, i was told that French euro-denominated debt does not trade a lot in the US because the French impose withholding tax. i preferred not to use mutual funds because of their expenses (which are imo very high compared to nominal yields), and because many foreign bond funds hedge currency--this means there is not a wide selection of non-hedging foreign bond funds, and one is still left with high expenses. the highest yields were New Zealand (some as high as 6% or so, depending on the yr, ranging from 2004 to 2011), followed by Queensland and then Australia. Canadian 5yr was priced around 4.2% recently, and the recently issued October 5yr Eurobund carried a 3.5% coupon. i bought some of this at par. all in all, i prefer places with higher coupons, i.e., Oceania, but those are also small economies which could be negatively impacted by an Asian slowdown. not having one right answer, i prefer to have a number of (hopefully) "semi-right" answers... weighted avg maturity across all issues is about 4.25 yrs. i inquired re Korean Won and was told US investors could not buy these. as for Japanese bonds, Grant has called the 10-yr JGB "the world's worst investment", with a yield of 0% at at least one point. in any case, i see no point in getting into fixed income with near-zero yield (preferring gold for zero-yield anti-dollar investments). also, because of my business dealings, i am already heavily exposed to the JPY/USD cross in favor of a strong JPY. i briefly looked into what was offered at Everbank. while they offer a wide range of currencies (e.g., CDs), they seem to have fees i was not interested in paying. with the above foreign bonds, which i may add to yet, and with my gold miners and foreign stocks, i feel i am fairly insulated from the direct effects of a US dollar plunge, to the extent i could be as a US homeowner. but of course, secondary effects, such as cratering of foreign economies, may create difficulties. hopefully the miners will be of some support there in the global currency "race to the bottom".