China may witness its first local
government bond defaults, although the timing was uncertain, Fitch Ratings said in a press release issued on Sunday, amid persistent concerns over high debt levels in the world second largest economy.
Not exact matches
Government bonds could help reduce
default risk, but because of the length of maturity required to earn any meaningful yield, they do little to reduce duration risk - i.e. the overall sensitivity of a portfolio to interest rate rises.
The option to hold a
bond to maturity and «get your money back» (let's assume no
default risk, you know, like we used to assume for US
government bonds) is, apparently, greatly valued by many but is in reality valueless.
Without debt restructuring, Puerto Rico will be forced to
default as it faces nearly $ 2.5 billion in
bond payments from May through July,
government officials have said.
Consider these risks before investing: The value of securities in the fund's portfolio may fall or fail to rise over extended periods of time for a variety of reasons, including general financial market conditions, changing market perceptions, changes in
government intervention in the financial markets, and factors related to a specific issuer, industry, or sector and, in the case of
bonds, perceptions about the risk of
default and expectations about changes in monetary policy or interest rates.
U.S.
government bonds offer the most protection against
default.
They extend tests of DR - CAPM to six portfolios of U.S. stocks sorted by size and book - to - market ratio, five portfolios of commodities sorted by futures premium and six portfolios of
government bonds sorted by probability of
default, and to multi-asset class combinations.
If there's not a single buyer that will take on both the assets and liabilities without the
government assuming private
default risk, Bear's assets should be put out for bid, Bear's
bonds should go into
default, and by the unfortunate reality of how equities work, Bear's shareholders shouldn't get $ 2 - they should get nothing.
12-10-2010 Resignation of Chairman 11-10-2010 Caledonia Mining Announces Third Quarter 2010 Results 10-21-2010 Caledonia Mining Announces the Commissioning of the No. 4 Shaft Project 08-26-2010 Caledonia Mining Announces the Completion of the Underground Installations on the No. 4 Shaft Project 08-18-2010 Caledonia Option Exercise Prices Reduction Becomes Effective 08-12-2010 Caledonia Mining 2010 Second Quarter and Half Year Results and Management Conference Call 06-14-2010 Caledonia Commissions the First Standby Generator at Blanket Gold Mine in Zimbabwe 05-14-2010 Caledonia Mining First Quarter 2010 Results 05-06-2010 Caledonia Installing a Standby Generator at Blanket Gold Mine in Zimbabwe 03-31-2010 Caledonia Mining 2009 Fourth Quarter and Annual Results and Management Conference Call 02-12-2010
Government of Zimbabwe sets out Regulations for Indigenisation 01-29-2010 Reserve Bank of Zimbabwe
Defaults on
Bond Repayment to Caledonia Mining and update on timeline for completion of No. 4 Shaft Expansion
The Venezuelan
government and its state - run oil company, PDVSA, both
defaulted on certain
bonds in November, according to ratings agencies.
The announcement comes as Venezuela faces acute financing problems after creditors and ratings agencies declared the
government and state - run oil firm PDVSA to be in partial
default for missing interest and principle payments on
bonds.
Moreover, 7.2 per cent growth, which is the other way to look at not taking early benefits, plus indexation, is hard to achieve on a long term basis in income stocks or with federal
government bonds with no risk of
default.
(i.e. there governmental
bond holdings, to make it possible to compare what they would lose by the
government defaulting as compared to what they would gain by not being taxed to repay the debt over X years?
After the
government shutdown and the startle of debt
default, is it possible for the US
government to issue
bonds, and borrow money from other countries?
Since the crash, a down - spiral is underway in the $ 2.8 trillion municipal - funding system, in which local
governments don't have the revenue to meet
bond payments, they can't get new financing, municipal
bond rates are rising, and, to worsen it all, crazy credit
default swap deals have been foisted on localities.
«Statistically» this year to date, «only» 30 municipal issuers have officially
defaulted on $ 1.5 billion in
bonds, but thousands of
government authorities are in de facto
default on payments, and madly scrambling for re-negotiation, or forebearance, or blind hope.
Underperforming is the
defaulted sector down nearly 3.8 % but what is extremely telling is the performance of the U.S.
Government Bond backed Prerefunded and Escrowed to Maturity sector.
Although
government bonds are supposed to be guaranteed because they can use tax revenue to pay out the money, there have been instances of countries like Russia
defaulting on its domestic currency debt.
Instead, you start with the local currency
government bond rate and subtract out the portion of that rate that you believe is due to perceived
default risk:
Second, both the rating - based and sovereign CDS
default spreads are US dollar based and netting it out against a local currency
government bond rate can be viewed as inconsistent.
Bond prices may fall or fail to rise over time for several reasons, including general financial market conditions, changing market perceptions of the risk of
default, changes in
government intervention, and factors related to a specific issuer or industry.
Consider these risks before investing:
Bond prices may fall or fail to rise over time for several reasons, including general financial market conditions, changing market perceptions of the risk of
default, changes in
government intervention, and factors related to a specific issuer or industry.
The third approach is to ignore
government bond rates in the local currency entirely, either because you believe that they are not liquid enough to yield reliable numbers or because they contain
default risk.
Namely,
bond coupon payments are determined by market interest rates, the type of issuing entity (
government bonds pay lower coupons than corporate
bonds because of lower
default risk), the creditworthiness of the issuing entity (AAA companies pay lower coupons than CCC companies), and the maturity of the
bond, which we will talk about next.
Finally, the risk - free rate of return is usually calculated using U.S.
government bonds, since they have a negligible chance of
default.
They're generally safe because the issuer has the ability to raise money through taxes — but they're not as safe as U.S.
government bonds, and it is possible for the issuer to
default.
So, unless something truly catastrophic happens (like the US
government defaulting on its
bonds) or people in the company break the regulations (which would invovle all kinds of serious crimes and require complicity or complete failure of the auditors), your premiums and the contractual obligation to you would still be there, and would be absorbed by a different insurance company that takes over the defunct company's business.
Bonds issued by the US
government pay a relatively low rate of interest but have the lowest possible risk of
default.
Consider these risks before investing: Stock and
bond prices may fall or fail to rise over time for several reasons, including general financial market conditions, factors related to a specific issuer or industry and, with respect to
bond prices, changing market perceptions of the risk of
default and changes in
government intervention.
Consider these risks before investing:
Bond prices may fall or fail to rise over time for several reasons, including general financial market conditions, changing market perceptions (including perceptions about the risk of
default and expectations about monetary policy or interest rates), changes in
government intervention in the financial markets, and factors related to a specific issuer or industry.
One caveat: Because
bond index funds own so much U.S.
government debt, where there is little risk of
default, these funds should hold up well in financial meltdowns.
For Europe, of course, the problem is not only recession risk but the high level of debt to GDP, and rising funding costs and
default risk reflected in European
government bonds (outside of Germany, which is seen as the safe haven).
Pros of investing in zero - coupon
bonds: Certainty of future returns; low
default risk in
government STRIPS Cons of investing in zero - coupon
bonds: Phantom taxation occurs if used in a regular investment account; no interest until maturity
Bonds are subject to interest rate risk (as interest rates rise
bond prices generally fall), the risk of issuer
default, issuer credit risk, and inflation risk, although U.S. Treasuries are backed by the full faith and credit of the U.S.
government.
Like other
bonds, issuers are rated so the lower the risk of
default by the
government entity, the higher the quality of the
bond.
Since the
government is unlikely to
default on a loan, gilts are considered to be lower risk than corporate
bonds.
The
government, as of 2011, has never
defaulted on
bonds.
Asset prices may fall or fail to rise over time for several reasons, including general financial market conditions, changing market perceptions (including, in the case of
bonds, perceptions about the risk of
default and expectations about monetary policy or interest rates), changes in
government intervention in the financial markets, and factors related to a specific issuer, industry or commodity.
Stock and
bond prices may fall or fail to rise over time for several reasons, including general financial market conditions, changing market perceptions (including, in the case of
bonds, perceptions about the risk of
default and expectations about monetary policy or interest rates), changes in
government intervention in the financial markets, and factors related to a specific issuer or industry.
Besides the non-parallel rating systems between local and the international standards, the implicit
government guarantees prevented
bond defaults, which had made it difficult to analyze the true underlying credit risk.
In other words, the
government won't let the company
default and so the
bond continues to pay off.
The facts are the situation isn't looking good: the pending PREPA July 1st
default looms on the market, the possible restructuring of the
Government Development Bank debt and the possible postponement of G.O. set — asides have sent alarms to G.O.
bond holders.
Stock and
bond prices may fall or fail to rise over time for several reasons, including general financial market conditions, changing market perceptions (including, in the case of
bonds, perceptions about the risk of
default and expectations about changes in monetary policy or interest rates), changes in
government intervention in the financial markets, and factors related to a specific issuer or industry.
Generally, the market interest rate for any particular term of
bond is represented by the yields on
government bonds, as these are viewed as highly liquid and of very low
default risk.
But, short of the
government defaulting, there's far less risk in
bonds than there are in stocks.
But it is to be noted that there have been cases where
government bonds have
defaulted while paying interest and principal amount.
A Greek
Government 10 - year
bond yields about 29 % (extremely high yield and perceived likelihood of
default)
Bonds issued by
government or
government agencies or
government - sponsored enterprises, in the majority, are less likely to suffer from
default due to their ability to raise taxes.
The degree to which an agency
bond issuer is considered independent from the federal
government impacts the level of its
default risk.
Why would I pay $ 1,000 for a Corp A
bond paying 5 % interest — and take on the risk that Corp A may
default — when I can make almost as much interest on a «risk - free» (we hope) U.S.
Government bond?