I have talked from time to time about how the policies of the U.S. Federal Reserve have ignited a “Dash For Trash” as investors chase anything that looks like it has an above average yield to compensate for the low yields on U.S. government and high-grade corporate debt. REITs, high-yield bonds, companies with high dividend payout ratios, and bonds issues by suspect governments around the world have benefitted.
One of the examples that I have focused on are the 10-year bonds issued by the Government of Rwanda back in April. They were initially priced to yield under 7% and investors snapped them up. I found it surprising that an agrarian economy dependent upon foreign aid in a region that is only a decade and a half removed from eye-popping mass carnage and ethnic cleansing was able to securing financing at these rates.
Well, Rwanda is back in the news. Adversaries of the current leadership have been threatened and some are showing up dead. ( http://www.usatoday.com/story/news/world/2014/01/02/rwanda-spy-chief-dead/4287373/ ) All the while, the current yield on the Rwandan 10-year bond is still at 7.4%, thanks in part to the policies of the Fed.
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