Editor’s note: This article was first published in July 2010. Its context is that month: Spain’s World Cup win, the Bund yield down to 2.2%, Spanish yields of 4.9% (10-year) and 5.8% (30-year), and Morgan Stanley’s recommendation “a few weeks ago”.
It seems that since Spain won the World Cup and a brand was born (marca España, “Brand Spain”), investors are confident that Spain is continuing to emerge from the recession it is in. A while ago, many were distrustful and steered investors toward the famous Bund, Germany’s 10-year bond.
As a result, investors piled into the German bond, which became so inflated that its yield fell to as low as 2.2%.
A few weeks ago, Morgan Stanley advised investors to buy Spanish public debt. It seems Spain’s debt isn’t as large as some wanted us to believe.
Times of crisis are times of opportunity, so investors will find their chance to earn a yield of up to 4.9% at 10 years and 5.8% at 30 years by buying Spanish public debt.
This may be your big chance to start investing.
Definition of bonds: Bonds are securities issued with maturities of under five years that entitle the holder to receive income or a stream of periodic payments in exchange for handing over a sum of money when they buy them. There are various ways they can pay a return: periodic coupons, issuance at a discount, conversion into shares, subordinated bonds, and so on.
Further reading
- Why invest in a company merger
- The 7 levels of investors and types of investments
- A good time to invest in Inditex
Featured image: Luis García ( Zaqarbal ), CC BY-SA 3.0, via Wikimedia Commons.
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