sovereignman.com / by Simon Black / June 20, 2017
Apparently while I was in the air yesterday flying between Asia and Europe, the financial system proved once again that it believes in magic beans.
The latest absurdity is that the government of Argentina sold $2.75 billion worth of bonds yesterday afternoon.
It’s not strange or unusual for a government to sell bonds; it happens multiple times across the world nearly every single day of the year.
What’s totally insane about yesterday’s bond sale in Argentina, though, is the duration of these particular bonds.
Remember that a bond is similar to a loan; as an investor, you’re basically loaning money to whichever government issues the bond.
And, like a loan, a bond has a maturity date– the date at which the government is supposed to pay you back the “face value” of the bond.
often have a 3-7 year term. Student loans can easily go 10 or 15 years. A home mortgage can last 30 years.
It’s the same with government bonds, which often have a term up to 30 years.
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