Showing posts with label convertible bonds. Show all posts
Showing posts with label convertible bonds. Show all posts

Monday, May 30, 2011

Credit 0%




What is the advantage to invest in an instrument whose return is zero, then we get the same result by quietly leaving the money in a bank account? The problem is that it is not so easy with a bank account, it was opened at bank, and including advertising adorns this post. Or is it the fear of deflation, which suggests a yield of 0% still provides a positive real rate? The credit market is very ill, much more in fact than the equity market, which has adjusted the profit expectations.
Without understanding what was happening, I recently bought a convertible bond, which gives me 27% return in just over a year. The company has no other debt, generates cash flow largely positive, and blocked the bank the amount of reimbursement for such convertible. Is it the risk that the bank will default that gave this profitability? I noticed that an investor sold his shares in bundles of 500, hidden orders, so obviously forced. I turned the problem into my poor brain disoriented; I did not find any other explanation for what seemed like a gift, although I'm not really quiet on this. The title has yet taken up 12% since.
0% for a Treasury Bond, 27% for a corporate bond with little risk of default risk compensation definitely does not turn round on the planet by Finance.