Foreign I Bond Equivalents

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copenhagen227
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Joined: Mon Jun 14, 2021 1:46 pm

Foreign I Bond Equivalents

Post by copenhagen227 »

US Treasury I bonds offer something like 7.1 percent interest, are inflation protected and are very liquid after 1 yr (but you cant invest more than 10k in them). Are there any foreign, developed countries that offer something like the I bonds, but without the 10k limit on investment? Thanks in advance.
ivk5
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Re: Foreign I Bond Equivalents

Post by ivk5 »

I believe UK has inflation linked gilts (then you have currency risk, your currency vs GBP). Italy has something similar (xxx/EUR risk, plus meaningful credit risk). Not sure about DE.

What are you trying to accomplish (XY problem)? These economies have rather different interest rate and inflation dynamics from US, reflected in forex markets. Directly comparing real interest rates across markets/currencies may not work out the way you think (no free lunch).
AnilG
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Re: Foreign I Bond Equivalents

Post by AnilG »

Canadian government issues Real Return Bond (RRB) as inflation protected bond. I believe government of most developed countries issue inflated protected bonds, Japan has one too.
EddyB
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Re: Foreign I Bond Equivalents

Post by EddyB »

ivk5 wrote: Thu Jan 20, 2022 5:13 am I believe UK has inflation linked gilts (then you have currency risk, your currency vs GBP). Italy has something similar (xxx/EUR risk, plus meaningful credit risk). Not sure about DE.

What are you trying to accomplish (XY problem)? These economies have rather different interest rate and inflation dynamics from US, reflected in forex markets. Directly comparing real interest rates across markets/currencies may not work out the way you think (no free lunch).
And France.
Topic Author
copenhagen227
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Joined: Mon Jun 14, 2021 1:46 pm

Re: Foreign I Bond Equivalents

Post by copenhagen227 »

Essentially I am seeking to invest in bonds that pay something like 7% interest and are liquid after one year. Do any of these countries have bonds that offer similar interest and liquidity? Are there brokers that can facilitate such investments or do you do it yourself?
Thank you all for your responses.
Topic Author
copenhagen227
Posts: 37
Joined: Mon Jun 14, 2021 1:46 pm

Re: Foreign I Bond Equivalents

Post by copenhagen227 »

EddyB wrote: Thu Jan 20, 2022 6:20 am
ivk5 wrote: Thu Jan 20, 2022 5:13 am I believe UK has inflation linked gilts (then you have currency risk, your currency vs GBP). Italy has something similar (xxx/EUR risk, plus meaningful credit risk). Not sure about DE.

What are you trying to accomplish (XY problem)? These economies have rather different interest rate and inflation dynamics from US, reflected in forex markets. Directly comparing real interest rates across markets/currencies may not work out the way you think (no free lunch).
And France.
Essentially I am seeking to invest in bonds that pay something like 7% interest and are liquid after one year. Do any of these countries have bonds that offer similar interest and liquidity? Are there brokers that can facilitate such investments or do you do it yourself?
Topic Author
copenhagen227
Posts: 37
Joined: Mon Jun 14, 2021 1:46 pm

Re: Foreign I Bond Equivalents

Post by copenhagen227 »

AnilG wrote: Thu Jan 20, 2022 6:16 am Canadian government issues Real Return Bond (RRB) as inflation protected bond. I believe government of most developed countries issue inflated protected bonds, Japan has one too.
Essentially I am seeking to invest in bonds that pay something like 7% interest and are liquid after one year. Do any of these countries have bonds that offer similar interest and liquidity? Are there brokers that can facilitate such investments or do you do it yourself?
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rob
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Re: Foreign I Bond Equivalents

Post by rob »

Does Iceland still sell them? :oops:
| Rob | Its a dangerous business going out your front door. - J.R.R.Tolkien
exodusNH
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Re: Foreign I Bond Equivalents

Post by exodusNH »

copenhagen227 wrote: Thu Jan 20, 2022 10:19 pm Essentially I am seeking to invest in bonds that pay something like 7% interest and are liquid after one year. Do any of these countries have bonds that offer similar interest and liquidity? Are there brokers that can facilitate such investments or do you do it yourself?
Thank you all for your responses.
You know that rate resets every 6 months, right?
ivk5
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Re: Foreign I Bond Equivalents

Post by ivk5 »

copenhagen227 wrote: Thu Jan 20, 2022 10:19 pm Essentially I am seeking to invest in bonds that pay something like 7% interest and are liquid after one year. Do any of these countries have bonds that offer similar interest and liquidity? Are there brokers that can facilitate such investments or do you do it yourself?
Thank you all for your responses.
What are you going to do about currency risk?

TANSTAAFL…
calwatch
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Joined: Wed Oct 02, 2013 1:48 am

Re: Foreign I Bond Equivalents

Post by calwatch »

Israel bonds are mostly purchased for non-investment purposes but are high yield, dollar denominated, and are from a country with an impeccable payment history to now (although, of course, they could be wiped off the earth at any instant by their enemies). There also is no way to redeem them early.
https://www.israelbonds.com/Offerings-R ... Rates.aspx

Here's an old thread on this: viewtopic.php?t=155321
Karamatsu
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Re: Foreign I Bond Equivalents

Post by Karamatsu »

I believe government of most developed countries issue inflated protected bonds, Japan has one too.
There is a Japanese inflation-linked bond. It's more like a TIPS than an I-Bond, so there are no restrictions on when you can sell, but the current rate is less than 0.5%, so not quite what the OP is looking for unless you're making a play on the exchange rate. The big problem with any foreign inflation-indexed bond, versus the I-Bond, is that foreign bonds won't get any kind of special tax treatment from the IRS. Even if you found one where the interest accumulated to principal (as with I-Bonds), avoiding any coupon payments, the IRS would tax you on the phantom income.

If inflation-indexing isn't important, and you're just looking for 7% return on a government bond, then you're probably going to have to look at below-investment-grade issues. For example, the 10-year government bond from Bangladesh currently yields 7.235% and is rated BB-, while the 10Y bond from South Africa (also BB-) is yielding 9.24%. As you can see, yields vary a lot depending on conditions in each country. To buy bonds like that you'll almost certainly need to go through a broker.
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