12% return from Reykjavik?

[rock3r]

The Icelandic Krone suffered a run lately, so the central bank have pushed up rates to about 12-14%.

Now that sounds to me like a fantastic return, albeit with a currency risk.

I have never invested in bonds, but does anyone know how, hypothetically, one could get a bit of that action.

Someone told me that there'd be a minimum investment of a large amount, high five figures, to buy bond guaranteed to pay 14% per annum (in Icelandic krone) if held to maturity. That may be possible.

Assuming I can get €100K or so together, how would I go about taking advantage of this? Would I need to be buying tens of millions before I get the full deal?

 

[room305]

Re: 12% return from Reykjavik?!?

Why not invest in a fund that invests in Icelandic bonds? They have the expertise and the minimum investment will be much lower.

Have a look [broken link removed]

However, the fund will track the performance of the bonds, whereas if you want the coupon rate you will have to buy and hold until maturity.

 

[Bob_tg]

I'd be a little more careful before betting on the Icelandic currency. There are potential further negative effects on the Icelandic Krone in relation to a rise in Japanese interest rates. Over the last few years, borrowers in Japan had moved the 0% borrowings to countries like New Zealand and Iceland, to take advantage of this gap. Now that interest rates are in postive territory in Japan and may rise again later this year, liquidity may be pulled out of Iceland and New Zealand and placed back Japan. This could weaken these currencies even more. It could be a goot bet, but maybe hedge a bit with the Yen?

 

[rock3r]

Re: 12% return from Reykjavik?!?

whereas if you want the coupon rate you will have to buy and hold until maturity.

If I wanted to do exactly that, how would I go about it?

Is there any way to find out what the minimum investment would need to be?

Would payments be made annually?

Would I need an account in an Icelandic bank?

 

[room305]

Re: 12% return from Reykjavik?!?

If I wanted to do exactly that, how would I go about it?

Is there any way to find out what the minimum investment would need to be?

Would payments be made annually?

Would I need an account in an Icelandic bank?

I have absolutely no idea but I'm sure the Icelandic government has this information on its website. Likewise for Icelandic corporate bonds.

 

[rock3r]

Re: 12% return from Reykjavik?!?

I have absolutely no idea but I'm sure the Icelandic government has this information on its website. Likewise for Icelandic corporate bonds.

You'd expect that, wouldn't you?