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Bonds in sentence

2285 examples of Bonds in a sentence

Surprisingly, Eurobonds issued by a Germany-less eurozone would still compare favorably with those of the US, UK, and Japanese bonds.
The bonds would compare favorably with the government bonds of countries like the United States, the United Kingdom, and Japan, because the euro would depreciate, the shrunken eurozone would become competitive even with Germany, and its debt burden would fall as its economy grew.
Whether that would improve the credit ratings of the jointly issued bonds is another matter.
There are some new business models (such as social-impact bonds), and there are certainly businesses that sell social programs to payers such as governments, just as there are charities that outsource.
Holders of Greek debt maturing now are repaid courtesy of the €110 billion bailout program, and holders of Irish bank bonds have been given a guarantee by the Irish government, whose promises have in turn been underwritten by the EFSF.
This means that the Irish government (maybe the next one) should demand that holders of bank bonds share the losses, perhaps by offering them a simple debt-equity swap.
The yields and volatility of longer-term bonds should then fall relative to short-term securities, allowing peripheral governments to finance themselves reliably and at reasonable cost.
Now, the CDS market offers a convenient way of shorting bonds, but the risk/reward asymmetry works in the opposite way.
Shorting bonds by purchasing a CDS contract carries limited risk but almost unlimited profit potential, whereas selling a CDS contract offers limited profits but practically unlimited risks.
This encourages short-side speculation, which places downward pressure on the underlying bonds.
Create Growth-Linked BondsA year ago, at the Summit of the Americas, 34 western hemisphere heads of state agreed to promote the creation of government-issued growth-linked bonds whose payout is tied to gross domestic product (GDP).
Only one major proposal related to such bonds, from Argentina, is on the table.
I have argued for growth-linked bonds since my 1993 book Macro Markets .
The simplest form of growth-linked bonds would be a long-term government security that pays a regular dividend proportional to the GDP of the issuing country.
Suppose that the Argentine government issued perpetual bonds that paid an annual dividend equal to one ten-billionth of Argentine GDP, payable in pesos.
Because Argentina’s annual GDP now runs at about 500 billion pesos, one of these bonds today would pay a dividend of 50 pesos (about $17 or €13) a year.
The market for GDP-linked bonds would arrive at a price that makes them attractive to investors, reflecting expectations and uncertainties about the issuing country’s future.
Until there is a market for such bonds, we cannot know what the price will be.
But we can expect that the market for long-term GDP-linked bonds from countries like Argentina, where the future of the economy is uncertain, would be volatile, as investors adjust their expectations of future GDP growth up and down in response to new information.
To be sure, investors would have then lost on their bet on Argentina’s growth, but they would still have been protected against inflation, even if their bonds had not been denominated in dollars (because Argentina’s nominal GDP would have moved up with inflation).
The stumbling block has been potential investors’ fear that accounting fiascos in emerging countries would render the bonds unsafe.
In the meantime, we should not give up on trying to create these bonds.
True, advanced economies are relatively more stable, which means that the bonds would have a less distinctive risk-management advantage.
The spread of inflation-indexed bonds serves as a historical precedent.
Finland was the first to issue national inflation-indexed bonds, in 1946, in response to massive wartime price growth.
GDP-linked bonds would also allow hedging the risk of inflation, plus respond to GDP growth.
Some will object that there is little point in creating GDP-linked bonds in advanced countries, because there is little uncertainty about GDP growth there.
If personal pension accounts or provident funds are invested in GDP-linked bonds, the payments that retirees receive in 25 years will reflect the growth rate of the economy – and that of the tax base – to that date, which all makes good sense.
Sweden’s pension system recently created a link between national income growth and benefits, but the reforms did not include creating GDP-linked bonds, a natural adjunct to such a scheme.
At a time when many advanced countries run government deficits, GDP-linked bonds would improve risk management and bring down financing costs.
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