Loan or bond covenants often require borrowers to agree to maintain a minimum level of equity capital or cash on hand. Government bonds, on the other hand, have no covenants.

Pertama, obligasi pemerintah negara negara Eurozone harus memuat klausa yang memudahkan bail in bagi pemegang obligasi.

Governments usually borrow by issuing securities, government bonds and bills.

Bond market vigilantes already have taken aim at Greece, Spain, Portugal, the United Kingdom, Ireland, and Iceland, pushing government bond yields higher.

Investors naturally respond to unsustainable debt by selling bonds until interest rates become ridiculous.

Nevertheless, the market for Japanese Government Bonds (JGBs) has so far remained stable.

Draghi reversed the euro s slide into oblivion by promising potentially unlimited purchases of member governments bonds.

Converting all outstanding government bonds with the exception of Greece s into Eurobonds would be by far the best remedy. It would require no transfer payments, because each country would remain responsible for servicing its own debt.

Low interest rates meant that deficits could be financed by floating bonds.

Converting all outstanding government bonds with the exception of Greece s into Eurobonds would be by far the best remedy.

Long term government bond yields are already very low, and a further reduction will not significantly change private agents borrowing costs.

During the global financial crisis, even the safety of bank deposits and government bonds was in doubt for some investors.

Later, the Basel accords whetted banks appetite for more government bonds by ruling them virtually risk free. Banks loaded up on the relatively high yield debt of countries like Greece because they had to set aside very little capital.

It seems clear that the European Central Bank will be forced to buy far greater quantities of eurozone sovereign (junk) bonds.

That may work in the short term, but if sovereign default risks materialize as my research with Carmen Reinhart suggests is likely the ECB will in turn have to be recapitalized.

He was entrusted with a mission of selling state bonds in Amsterdam, Holland being the financial center of Europe at the time.

More importantly, increasingly nervous bond markets will at some point start questioning the sustainability of US public finances.

Investors are again making the mistake of pricing bonds in expectation that the downward trend of inflation will continue into deflationary territory.

Ivy League Investors

What do investors want?

They need investors.

In the eurozone, lower long term rates for government bonds are thus unlikely to improve the corporate sector s financing conditions and boost investment demand.

In reality, by purchasing large volumes of government bonds, the ECB was crossing the Rubicon after all, it is explicitly prohibited from financing governments.

For some time now, Greek ten year government bond yields have been about 300 basis points above German yields. This is a sign that investors now see a significant risk of a Greek default or of Greece exiting from EMU and redenominating its government bonds.

This is a sign that investors now see a significant risk of a Greek default or of Greece exiting from EMU and redenominating its government bonds.

Will the Bond Bubble Burst?

Bond markets are easily lulled.

How Scary Is the Bond Market?

Italian savers, for example, still hold a significant volume of foreign assets (including German bonds), and foreign investors still hold a sizeable share of Italian government bonds. But interest rates on longer term Italian government bonds (and Italian private sector borrowing costs) are about 250 basis points higher than those on the German equivalents (this is the risk premium).

Investors aren t blind.

Government investors are not necessarily driven by the return maximizing calculus that motivates private investors.

Once investors understood Argentina s predicament, they started dumping its government bonds, and the risk premium on loans to Argentina rose several percent.

Should Bondholders be Bailed Out?

America s Bond Market Blues

I have been thinking about the bond market for a long time.

Savings Bond Inventory

Under the pre OMT regime, a capital outflow from Spain, whether through the sale of government bonds or the liquidation of private claims, resulted in tighter monetary conditions.

Another is to sell off government bonds held by the central bank in order to take money out of circulation again, just the opposite of what the Fed is now doing.

Many Europeans believe that aid agencies like the World Bank will shrivel and die if left to depend on grants for income. But I believe that the problem could easily be solved by, say, giving the World Bank an endowment of rich country bonds and permitting it to expend the interest.

Meanwhile, rising fiscal deficits in most economies are now pushing up the yields of long term government bonds.

But I believe that the problem could easily be solved by, say, giving the World Bank an endowment of rich country bonds and permitting it to expend the interest.

Investors eventually do learn.

Patient investors should be rewarded.

Investor, beware!

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