Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.
Article / 11 July 2014 at 7:51 GMT

World Cup Bond Update: Who will lift the trophy?

Fixed Income trader / Saxo Bank
  • German bonds remain the bookmaker's favourites
  • Argentinian bonds rebound since default order
  • Argentine bonds remain the province of risk takers
By Michael Boye

After the historic and mind-blowing win against Brazil in the semi final, Germany will easily be the bookmaker's pick to win the 2014 World Cup Final. Looking to the bond markets, you will get the same answer - by an even larger margin.

Just as on the green football fields of Brazil this summer, Germany is an equally dominant force in the bond markets, and remains one the world's most astute creditors. Argentina, to the contrary, currently finds itself fighting off an imminent default threat.

Following the latest turmoil in European markets, sparked by the concerns over Portuguese lender Banco Espirito Santo, the 10-year German yield has been flirting with the all-time low of 1.16 percent reached in early 2013. Yield-hungry bond investors with a hang for German exposure will alternatively look to Deutsche Bank's CoCo issues (5.9 percent yield for the EUR issue with a 2022 call or 6.1 percent yield for the USD issue with a 2020 call) or the low-cost airliner Air Berlin (6.8 percent yield for the EUR issue with 2019 maturity).

If you are looking for even higher returns, in betting markets as well as bond markets, you might consider looking Argentina's way. From the initial shock when a US court order brought the future payments of its international government bond issues in doubt, the government bonds in question have rebounded significantly. Investors find comfort in the fact that, unlike traditional default cases, this is not a question over Argentina's ability to service its debt, but rather whether they will actually be allowed to by a foreign court.

Confidence in a peaceful solution has been growing, as negotiations with holdout creditors allegedly progresses. The 2017 USD issue currently compensates risk-willing investors with an 8.5 percent yield.

- Edited by Adam Courtenay
Download document

Final weekend


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail