Tag Archives: bonds

China complains of U.S. debt, but has too much at stake to dump dollars


It is the ultimate ”too big to fail” global relationship, said Andy Rothman, an analyst in Shanghai for the investment bank CLSA. If Beijing even hinted that it might try to sell part of its U.S. debt, ”other countries might sell their dollar assets,” Mr. Rothman said, noting that this would drive down the value of China’s holdings. ”It would be financial suicide for China.”

From The International Herald Tribune:

China complains of U.S. debt, but has too much at stake to dump dollars
BY DAVID BARBOZA

SHANGHAI — However grim Washington’s debt and deficit negotiations may seem to U.S. citizens, the impasse is nearly as disturbing for China.

As the United States’ biggest foreign creditor — holding an estimated $1.5 trillion in Treasury securities and other U.S. government debt — China has been a vocal critic of what it considers Washington’s politicized profligacy.

”We hope that the U.S. government adopts responsible policies and measures to guarantee the interests of investors,” Hong Lei, a Foreign Ministry spokesman, said at a news conference last week.

Beijing might prefer to respond by starting to dump some of its U.S. debt. But in this financial version of the Cold War, analysts say, both sides fear mutually assured destruction. One reason America would want to avoid defaulting on its debt is that such a move could alienate China, which is a steady purchaser of Treasury securities. Beijing, meanwhile, already has too much invested in U.S. debt to do much more but continue to buy, hold and grumble.

It is the ultimate ”too big to fail” global relationship, said Andy Rothman, an analyst in Shanghai for the investment bank CLSA. If Beijing even hinted that it might try to sell part of its U.S. debt, ”other countries might sell their dollar assets,” Mr. Rothman said, noting that this would drive down the value of China’s holdings. ”It would be financial suicide for China.”

http://www.nytimes.com/2011/07/19/business/china-largest-holder-of-us-debt-remains-tied-to-treasuries.html

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RIP: QE2


QE2 is no more. Yesterday the FED concluded its last asset purchase of the QE2 program.



The question now is what will be the next move by the FED as it remains committed to ensuring that the economic recovery continues amid signals that the general recovery is slowing.
  • Treasury Secretary, Timothy Geither has reportedly indicated to the Obama administration that he could well step down in the coming months.

Mongolia plans to issue first sovereign bonds


The money has not yet come in, but the debt has already started…

Mineral-rich Mongolia plans to issue first sovereign bonds – FT.com

Mongolia plans to issue its first sovereign bonds this month, marking a milestone for capital markets in this resource-rich democracy.


The newly created Development Bank of Mongolia will issue $700m in sovereign bonds to fund lending programmesin areas that include infrastructure, industry, energy and roads. 

the issuance would take place in tranches beginning this month, with the first slice likely to be $100m.

The bond will be in tugrik, the Mongolian currency, which has appreciated by 1.6 per cent against the dollar since January.
investment in the mining sector has soared in the past two years along with global commodities prices.

Government revenues from the mining sector are set to jump next year as the Oyu Tolgoi copper and gold mine comes online, and politicians in Ulan Bator are looking for ways to manage the coming influx into state coffers.

The Development Bank is being set up with training from the Korean Development Bank and the Development Bank of Japan. 
yields on the bonds could be quite low, perhaps 6-8 per cent.


Mongolian sovereign debt has a B1 non-investment grade rating from Moody’s