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Rwanda Is Spain Even As PIMCO/Blackrock Cut European Exposure

Tyler Durden's picture




 

When Spanish bonds traded at yields above 7% last Summer, the world's central banks went into a whirlwind to proclaim that these levels did not represent reality (in spite of the depression-era style economic data the nation was spewing). Fast forward nine months, the data is worse and getting worserer but yields - through the guiding hand of Draghi, the self-referential buying of domestic banks, and the BoJ's risk-is-no-object reach for anything non-JPY denominated - have crushed to 4.3% pre-crisis levels. Meanwhile, a few thousand miles south, the nation of Rwanda is issuing its first international debt today at a 7% yield (to the Japanese we are sure) as over 90% of the world's sovereign bond markets are at or near all-time low yields.

 

Rwanda Said to Cap Bond at $400 Million, Guidance at ‘Low’ 7%

 

as over 90% of the world's sovereign bond yields are at or near all-time lows... The last column shows the change in yield from the 03/06/09 US equity lows...

 

So who is buying all this 'stuff' - well it's not the 'smart money' - via WSJ,

Pacific Investment Management Co., home to the world’s biggest bond fund, is cutting holdings of Italian and Spanish government bonds amid a sharp rally in the two markets this month.

 

The money management firm has “lightened up” in the past couple of weeks in the European debt as part of a broad reduction in exposure to riskier assets in the fixed income markets...

 

...

 

...the recent rally in prices of Italian and Spanish debt, which recently sent yields on 10-year debt to their lowest levels since 2010, was driven by liquidity from major central banks, which has overshadowed the euro zone’s economic and fiscal problems for the moment. Yields on bonds fall when prices rise.

 

“This central bank-inspired rally has made the markets more expensive,” said Balls. “Yields could go lower still in Spain and Italy but we have sold into the rally because we remain worried over the fundamentals in the euro zone.”

 

and Blackrock too... (via WSJ),

"We have been less enthusiastic about euro-zone sovereign debt compared to three to six months ago," said Rick Rieder, chief investment officer of fundamental fixed income and co-head of Americas fixed income at BlackRock. "If growth continues to deteriorate in the euro zone, due in large measure to weak private-sector lending from a deleveraging banking sector, we would further reduce our positions in the euro zone, such as in Italy and Spain."

Charts: Bloomberg

 

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Wed, 04/24/2013 - 13:48 | 3493623 Frank N. Beans
Frank N. Beans's picture

smart moves

Wed, 04/24/2013 - 14:01 | 3493625 magpie
magpie's picture

lol @ france

well done

go muffins

Wed, 04/24/2013 - 15:06 | 3494007 DoChenRollingBearing
DoChenRollingBearing's picture

 

 

Peru:

3.95% from table above

5.00% from Peruvian corporate bond, works for me

Thu, 04/25/2013 - 02:27 | 3496400 LaoTzu60606
LaoTzu60606's picture

where do i sign up?

not earning anything on this silver...

dios mio

 

LT

 

/s

Wed, 04/24/2013 - 13:47 | 3493627 Vegetius
Vegetius's picture

And the smart money boards the lifeboats and quietly rows away

Wed, 04/24/2013 - 13:49 | 3493628 kliguy38
kliguy38's picture

Sounds like another warm summer

Wed, 04/24/2013 - 13:50 | 3493640 youngman
youngman's picture

If you never plan on paying them off..why not offer them at 20%...then sell a bunch...and retire to some whites guys ranch that you stole...

Wed, 04/24/2013 - 14:00 | 3493686 All_Is_Well
All_Is_Well's picture

Do what they do, not what they say....

Wed, 04/24/2013 - 14:02 | 3493697 Panafrican Funk...
Panafrican Funktron Robot's picture

Funny, the difference between the BRICs yields and the "developed" markets.

Wed, 04/24/2013 - 15:15 | 3494041 Urban Redneck
Urban Redneck's picture

Rawanda isn't even a developing, emerging, or BRIC market, it's a Banana Republic (i.e. an undeveloped market).

Wed, 04/24/2013 - 15:31 | 3494129 Shaten
Shaten's picture

last time i checked Rawanda had reformed a lot of it's bussiness environment.

There is a chance it may prosper for a while.

Wed, 04/24/2013 - 16:03 | 3494286 Urban Redneck
Urban Redneck's picture

The Rawanda Stock Exchange http://rse.rw/

- a handful of guys writing on a white board  http://qz.com/71765/the-big-hopes-of-rwandas-tiny-stock-exchange/

"Only four companies are listed on the Rwanda Stock Exchange: two banks, a brewery, and a media house. But the tiny bourse, opened in December 2011, has big ambitions"

More importantly (in terms of how economies are categorized), there is no existing internal private debt market.

It's come a long way, but it has a long way still to go to even catch up with some it's fellow undeveloped neighbors.

Thu, 04/25/2013 - 02:31 | 3496403 LaoTzu60606
LaoTzu60606's picture

lived in that part of th world about 30 years ago...long way to go is an understatement of gargantuan proportions...

wake me when you can withdraw 100 american from an ATM without an armed guard...

 

LT

Wed, 04/24/2013 - 14:20 | 3493789 youngman
youngman's picture

Machettes sell big there too...

Wed, 04/24/2013 - 14:30 | 3493842 SDRII
SDRII's picture

Foreign aid securitization? Aircraft lease payoff? ILFC debt?

Form the IMF review:

Risks arise mainly from possible
cutbacks in aid and a more challenging
global environment. The mission focused
discussions on the macroeconomic
implications of a potential downside scenario
(Box 2). Under this scenario, delays in budget
support are assumed to extend beyond the
current fiscal year. Staff estimated such delays
could lower growth in 2013 by 1½ percentage
points and possibly more, depending on
magnitude of the second round effects.

USe opf proceeds

It incorporates the issuance before
end-2012 of a eurobond in the amount of
US$350 million, the proceeds of which will be
on-lent to the Kigali Convention Center (KCC)
and Rwandair to retire governmentguaranteed
loans (US$200 million) as well as
to finance the completion of the KCC project

(US$150million) before end-2013. Previously, it
had been assumed that these independent
companies would be able to mobilize the
required financing themselves, albeit with
government guarantees. Because they have
not been able to, the government has decided
to borrow the required funds and lend them to
the companies, thereby increasing its net
lending for FY
2012/13 and
2013/14.

Aircraft leases?Fleet

Good thing for those African carriers  like Ethiopia Air deciding to fly the "Permanent" Dreamliner. The decision is not related to the drone base...

 

US suspends aid

http://www.economist.com/news/middle-east-and-africa/21569438-will-rwand...

 

And donors resume aid...

http://www.independent.co.ug/rwanda-ed/rwanda/7585-donors-restore-aid-to...

 

 

Wed, 04/24/2013 - 14:34 | 3493852 The Dancer
The Dancer's picture

That 20% number rung a bell for me,youngman....When I first went down to Mexico in the late 80s, the banks were paying exactly that on deposits...I met a nice older man who had just retired from the US and was crowing about what a great deal he was getting 20% on his savings...but two months later he was crying foul...his $70,000US was devalued in half to $35000.....he was not a happy camper!

...

 

 

 

 

Wed, 04/24/2013 - 14:59 | 3493983 Lux Fiat
Lux Fiat's picture

I would have expected the Chinese to be likely buyers versus the Japanese.  I have to wander if Rwanda is the better risk for the rate.

Thu, 04/25/2013 - 02:32 | 3496407 LaoTzu60606
LaoTzu60606's picture

but what is the exit strategy?

seriously, rwanda?

 

LT

Thu, 04/25/2013 - 03:08 | 3496438 dunce
dunce's picture

The"Sting" was a good movie about con men. There was a line that surprised me by getting by the politically correct censors " nobody will trust a nigger with real money" this was a big elaborate con involving many people and big bucks. The question comes to mind now who will trust Rwanda with millions of money? It is sovereign debt and you can not foreclose on a country. Good honest govt. is possible in Africa but not very likely.

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