As the US dollar continues to fall, American investors are looking to place their money abroad and bonds issued by the government of Iceland are becoming an increasingly attractive option.
Bonds issued by the Icelandic governments have promised and delivered excellent rates of return in recent years. Some bonds paid yields as high as 14.3 per cent.
In addition to the payout, investing in Icelandic bonds is possibly a good way to play the currency markets, especially if the dollar continues to fall. Potential currency gains are just another reason why Icelandic bonds are appearing very attractive to American investors right now.
Before jumping into the market, investors should consider two things. The first is the volatility of the currency market. In order to invest in an Icelandic bond, American dollars must be converted into Krona. In order to collect the bond’s worth, those Krona must be returned into dollars. If the American dollar takes a turn for the better, the loss in currency conversion could eat up your profit margin.
In addition, you will be charged currency fees to make the conversions between dollars to krona and back again and paying fees also eats up profits.
Many financial advisors do suggest investing in foreign stocks, whether in Iceland or elsewhere as a means of diversifying a portfolio and if you’re not putting all your eggs in one Icelandic basket, it can be a good idea, particularly if it is done for the long term. Over a long period of time, the rise and fall of currency tends to even out, meaning that you can enjoy the returns from an investment over time, keep the stock while the currency is bad and sell when it works in your favour.
Welcome to this thread, the ‘Bromley86’, ‘Peter – London’ disinfo tag team.
Care to post your source Peter for the benefit of your enthralled readers?
Of course, the fact that the Republic of Iceland’s long term credit record is impeccable by any standard is something that you would like to ignore.
See Table 3. Sovereign credit ratings, and Tables 4-6 here at the Central Bank of Iceland:
http://www.sedlabanki.is/?PageID=789
(For a discussion on the Krona and exchange rates into foreign currencies see here:
https://www.icenews.is/index.php/2008/10/31/foreign-exchange-market/ )
Alejandro wrote:
>Where can i buy icelandic bonds?
Email bonds@bonds.is or call (+354) 569 9600 for information. (That’s on the bonds.is website.)
Alejandro:
Get professional advice before such a risky investment, make sure you can sue for your loses. The Icelandic Krona could lose 50% of its value over night, inflation may hit 75% according to the IMF.
Pretty sure there aren’t any new ones being issued ATM. Of course, I know next to nothing about bonds so I might be missing something.
I did see that you can buy up bonds issued by the 3 banks for something like 3 cents in the euro, but that’s a different bond.
“Suspension of Treasury notes auction
Monday, October 20, 2008
By GDM
Due to special conditions in the bond market, it has been decided to suspend an auction of Treasury notes that was planned to be held October 23, 2008.”
http://www.bonds.is/Article.aspx?catID=1628&ArtId=5215&showDate=true
Where can i buy icelandic bonds?