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Discussion Starter #1
Is there a way for Canadian individual investors to gain access to the European debt market, esp. the govt bonds issued by Greece, Spain, Ireland and the UK?
Are there ETFs, positive or inverse, that track these?
 

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Not sure.

But http://etfdesk.com is a pretty decent ETF search engine, and may have an answer for you.

A different question I was thinking: is European debt necessarily any better/worse than any other kind of debt?


K.
 

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Discussion Starter #3
A different question I was thinking: is European debt necessarily any better/worse than any other kind of debt?
K.
Due to the unique circumstances in Europe these days those bonds present an opportunity.
Yields are unbeliveably high
if you believe that these countries will either not default or there will only be a soft default, then this is an opportunity to pick up some Euro bonds at deep discounts.

of course the risk is that the default may be absolute and outright in which case most of the money will be lost or locked in very long term zero coupon bonds.
but what are the chances that the EU and IMF will let so many countries default at the same time?

so I'm looking for a way to either buy these bonds directly or an ETF that contains a basket of these govt bonds issued by Greece, Spain, Ireland and Italy.
Next in line will be the UK.
and at some point the USA as well since they are in no better position with their deficits.
 

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I don't know if there is an ETF for this, but keep in mind that an ETF may or may not reflect the same "opportunity" that you see in the underlying European govt. bonds.
You are expecting to buy this stuff at deeply discounted prices, but the ETF (if one exists) may not be trading at a similar discount.
If the European bonds are indeed an "opportunity", I'm sure you are not the only one scavenging for it.
Rest assured, other yield chasing investors (particularly, institutional) are already on the ball.
Therefore, any ETF representing those instruments may in fact be trading at a premium rather than a discount, which is totally contrary to what you are looking for.

It would be best if you can buy this stuff directly.
But I'm not sure if any Canadian brokerage exposes European debt instruments directly.
You may have better luck on the US exchanges.

Also, HSBC premium accounts allow direct trading on several foreign exchanges.
I'd imagine they give ability to trade on the LSE.
If so, you'll have much better luck there.
Interactive Brokers also provides access to foreign exchanges.
I have no experience with either.
 

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much easier to buy would be a handful of big euro bank ADRs. Others are already there. Today's volume in banco santander was over 19 million shares.
 

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Discussion Starter #6
much easier to buy would be a handful of big euro bank ADRs. Others are already there. Today's volume in banco santander was over 19 million shares.
what's an adr and how do I buy one?
and how does owning shares in an european bank give me exposure to the high yielding european govt. bonds?
the bank may hold such bonds but it's not the same thing as owning the bonds directly.
 

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Due to the unique circumstances in Europe these days those bonds present an opportunity.
Yields are unbeliveably high
Yeah, but corporate junk bonds also offer "unbelievably" high yields.

I'm not entirely convinced that there's anything intrinsically "better" about buying junk debt from insolvent European countries than buying debt from junk-rated corporations.


K.
 

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Discussion Starter #9
Yeah, but corporate junk bonds also offer "unbelievably" high yields.

I'm not entirely convinced that there's anything intrinsically "better" about buying junk debt from insolvent European countries than buying debt from junk-rated corporations.
K.
the diff. is that if a junk corp. can't pay it's bonds, it'll quietly default and investors will get nothing.
on the other hand, coutries like those in the EU are not junk corporations and they will not be allowed to fail by the EU and the IMF.
at worst, i expect a soft default i.e. the bonds will be re-issued upon maturity with another long term maturity date.
the interest payments will continue just like those of Dubai.
if the pigs (oops i mean, PIGS) are allowed to fail, where does it stop?
the UK is next and the US after that.

thanks for the link to adrs btw
 

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on the other hand, coutries like those in the EU are not junk corporations and they will not be allowed to fail by the EU and the IMF.
I think that's pretty optimistic.

In my opinion, Greece got lucky. But I'm not sure that Germany is going to step up to bail out Ireland, Portugal, Spain, and Italy. Historically, Greece has defaulted plenty of times over the past 100 years. Rather than bailing them out again, I imagine that the EU could cut them loose in the future.


K.
 

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tony boeckh is not a household name, but he should be. For decades economist boeckh was editor & publisher of BCA research including its prestigious flagship Bank Credit Analyst, without which no self-respecting north american bank, business school or brokerage library would dare to be seen.

now semi-retired, boeckh continues to write, advise, manage money, engage in quiet philanthropy and appear in the public media a few times a decade during acute meltdown crises. He's just published a book for the lay investor called The Great Reflation: How Investors Can Profit From the New World of Money.

can boeckh predict what lies ahead ? No, except that financial times will be wilder & rockier than ever before, he says, as governments seek to avert a global collapse worse than the 1930s by reflating.

here's a brief interview with tony boeckh that brings out some of his main points for retail investors:

http://blogs.sunlife.ca/todayseconomy/2010/05/j-anthony-boeckh-and-the-great-reflation/

and here are a couple of key extracts from the interview:

You believe we’re headed into a period of enhanced risk.

One of the points I make in the book is that this whole thing is an experiment. I wanted to use the word “experiment” in the title, but the publisher didn’t like that word. This is truly an experiment, and nobody knows where it’s going to go. One thing we do know is that we’re on a roller coaster. It’s going to be a more volatile roller coaster than we’ve seen before, and there will be shocks to the system that will come out of left field like the Greek debt crisis. So there will be a lot of risk in the system, a lot of volatility. It’s very important for investors to understand risk, to understand where we’ve come from and how this is going to play out in the future ... We’re going through an unwinding of private debt, which got pushed to ridiculous extremes ... During this period of deleveraging, it’s going to be a pretty risky shock-prone kind of world.

In addition to understanding this, what can investors do?

It’s pretty tough. People need tools to navigate this. It’s not really a buy-and-hold sort of world. You have to go with the liquidity flows. So when liquidity in the system is expanding, like it has been for 15 months, the riskier assets will tend to go up and you want to be with those flows. And then when the liquidity flows start to turn negative; you really should be taking some money off the table. That’s one aspect of managing through this. Another one is obviously diversification. One of the lessons of the crash of 2008-2009 is that virtually all risk assets had a correlation of one. In other words, they all moved sharply together. People thought they were diversified, and they turned out not to be. I think something else that’s really important is for people to hold appropriate amounts of liquidity. Almost everybody I talked to in 2008-2009 when the crash was gaining momentum, they all realized they didn’t have enough liquidity. So they were really kind of terror-struck.
 

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There is a new ETF that tracks European banks, trades on the NYSE under the symbol EUFN. It hasn't been around for very long, so there's not a whole lot of history there. All of these banks (I assume) have exposure to the PIGS' debt.
 
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