Iraqi Bonds Surge
December 14th, 2007 at 06:43pm Mark Noonan
From Bloomberg via Larry Kudlow over at NRO’s The Corner:
“[Iraq’s] $2.7 billion of 5.8 percent bonds due in 2028 returned 15.2 percent since July, according to JPMorgan Chase & Co. index data. Only Ecuador’s debt gained more, rising 18 percent.” Iraqi bonds were trading at 55 cents on the dollar last August, with an 11.5 percent yield. Today, they have rallied to 64 cents, bringing the yield down to 9.9 percent. U.S. money managers are saying these are the hottest bonds in the emerging market. This is a clear sign of confidence in the conduct of the war. After all, the folks swooping up this debt have money on the line. They are backing up opinions with real money. One bond manager who oversees $14 billion says, “There’s optimism the surge is starting to pay off.”
As I’ve always said, watch what people do in order to find out what is really going on - ten thousand statements about what a disaster Iraq is from lefties hammering away at computer keyboards aren’t worth someone going out and buying Iraqi bonds. The purchaser of the bond is doing two things - researching the situation to find out what is really happeneing, and then putting his own money at risk based on his knowledge. The rally in Iraqi bonds is proof positive that the surge is working very, very well.
Entry Filed under: Foreign Affairs, War on Terror
12 Comments
1. Rana Quijotesca | December 14th, 2007 at 8:16 pm
You honestly think that the average person does the necessary research before investing? You do know what percentage of traders lose lots of money, right?
2. Eric T | December 14th, 2007 at 9:00 pm
Rana
Bonds are generally alot safer than stocks, That is a great yield 11.5% If I had the money I’d buy that bond, it would be great for retirement. What does a typical IRA yield 4.5% around that area. That would be great for a pension fund.
That is the answer for Social Security, some good bonds like that. that’s like three times the yield on a T-bill.
3. Plainjane | December 14th, 2007 at 11:12 pm
What worries me about all these feel good stories is the fact this administration is so incompetent and will start to believe the headlines they are making a difference in an area of the world that has been in a state of civil war for hundreds of years. And like Reagan’s intervention in the Lebanese Civil War they will let their guard down with disatorous consequences. You have to know there are elements in Iraq that would like nothing more than to repeat 1983 Beirut and take out another 220 marines. 1/20/09
4. Kahn | December 15th, 2007 at 12:51 am
Plainjane - THREE of our enemies have stopped working on nuclear weapons that would have been aimed at us as a result of this administration.
I honestly think most people don’t REALLY understand what an atomic bomb does.
5. Diana Powe | December 15th, 2007 at 1:45 am
One wonders to what extent the bondholders know or think they know that the United States Government won’t allow the bonds to turn into junk bonds, no matter how the political and economic situation turns out.
6. Kahn | December 15th, 2007 at 1:55 am
Diana, like ours.
7. plainjane | December 15th, 2007 at 8:02 am
Diana Powe | December 15th, 2007 at 1:45 am
Good point, the United States probably guranteed them. Oh, well what is another couple of billion dollars in this sink hole.
8. Huck Fillary | December 15th, 2007 at 8:22 am
One wonders to what extent the bondholders know or think they know that the United States Government won’t allow the bonds to turn into junk bonds, no matter how the political and economic situation turns out.
Uh, cites, Diana? You know, you’re rapidly regaining your former bovine status, standing up there with plaincowjane like that. Have you been to her Branch Bovinian compound?
plainjane, do cows suffer from PMS?
Good point, the United States probably guranteed them. Oh, well what is another couple of billion dollars in this sink hole.
Sinkhole, cow? You want to know what a real sinkhole is? Try the War on Poverty. Now that’s a sinkhole, and all your dear leaders want to keep that war alive. Oh well–what’s another 11 trillion dollars anyway?
You must be awful young, plaincow. Been milked yet?
9. Eric T | December 15th, 2007 at 9:20 am
Yesterday Kuwait bought a division of Dow Chemical corp. recently Abu Dhabi bought into Citigroup bank. When Bush spoke last week on NIE report at the end of his speech, he mentioned how the mortgage problems are a tangled mess now because of all the foreign companies involved that bought into the mortgage industry. Bush said in the old days it was simple. it was between the local bank and the government. International trade keeps peace, but if we keep selling out our companies and land to foreign investors, do you see a day where Exxon, Chevron, Marathon, Valero get bought out by Iran or Saudi Arabia. I think bonds and mutual funds are good for international trade. But selling controlling stakes in corporations and land to foreign state owned governments is an issue that I’d like to know how you readers feel about.
10. Eric T | December 15th, 2007 at 10:40 am
The reason the American people left the Republican Party and voted for the Dims in 2006 is not just Larry Foley. It is because the American people watched the corporations bitch slap the Republican party and call the shots. The people want a government that can control the corporations, not be controlled by the corporations. The Government needs smack up the companies that want to outsource thousands of jobs to the Red Army.( the way Bill Clinton did to grow Wal-Mart) and putting thousands of American people on welfare and unemployment. Instead of a market Rally on Wall St. when they announce they are outsourcing thousands of jobs and profits should be higher this quarter. This is why Duncan Hunter can connect with many American workers and would make a good VP.
11. Eric T | December 16th, 2007 at 12:14 pm
I think Gates and General Petreus are much better than the first crew. These new guys are excellent, there is a world of difference. Bush made a great call replacing Rumsfeld.
12. Diana Powe | December 16th, 2007 at 7:32 pm
Huck,
Cites for what? All I did was wonder out loud about the possibilities, not state anything as fact. Bonds change status based on not only the borrower’s ability, on paper, to repay the face amount on the bonds, but also the market’s confidence that the borrower will be able to translate that forecast ability into real ability. If a lender truly had a credible assurance that the bonds were being quietly backed with the full faith and credit of the United States government, i.e., the taxing authority of Congress, or believed that assurance was there, then they would be more inclined to view the bonds as a safe investment than they might if they were only being backed by the full faith and credit of the Iraqi government, i.e., the taxing authority of the Iraqi Parliament. So, given the United States’ preference that the Iraqi government succeed rather fail, one wonders.