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Way to Get Paid #3: The Best Recovery Opportunity in Latin America

Most investors turn to bonds for conservative and steady investments. But you know that bonds also offer big time profit opportunities that rival and can even beat the stock market.

Some of the best ways to profit with bonds are by targeting countries that are emerging from troubled times. The skill is finding markets that are in the early stages of market friendly reforms so that you can grab the high yield and ride the bond up in price.

Sure, there’s a risk that the countries won’t fully recover, but there’s also protection against your money going down the tubes with them. One form of protection is the fact that I spend a lot of time studying and researching the political and economic conditions in each country to find the best picks, and I make sure they’re worth your time and money before recommending them.

Second, no government has ever gone bankrupt. There's nothing in the bankruptcy code that allows them to default. Even a worst-case scenario has ended in the reworking of debt.

As a result, you’re greatly protected against the risk but free to reap the rewards of a government that’s decided to turn its country around. This is exactly why I’ll spend time in Bond Desk laying out profitable investments in emerging markets. To whet your appetite, here’s one country and its bonds that are worth a look.

Colombia

For years, investors have been wary of Colombia because of its ongoing civil war. But continued moves toward peace, as well as a resolute (and paying) partner in the US means that Colombia is destined for success.

By becoming a close partner with the US, Colombia has brought in billions of dollars in economic and military aid. With that kind of money coming, it’s no wonder the country has been radically transformed.

That transformation is evidence that the government’s efforts to bring it’s fiscal house in order (e.g., reduce excess spending, decrease public debt levels), reorient the economy to be export driven and take on typical problems, such as unemployment, are working. And as the reforms continue, the momentum will carry Colombia’s economy to new heights.

Not only has the international community already helped—and then praised—Colombia’s reform efforts, but the country has a firm ally in those powerful and rich international organizations. Colombia’s former ambassador to the US, Luis Moreno, heads up the Inter-American Development Bank (IADB), which is part of the World Bank or International Bank for Reconstruction and Development (IBRD) network. Moreno’s new leadership role can only help Colombia, and will certainly provide the country with key assistance, should it falter.

Buying Colombian Bonds

Colombia’s success thus far, as well as the vocal and bountiful US support it’s received, has given the Colombian government a lot of credibility with its worldwide partners and financiers. That’s translated into an economic environment primed for profit.

More specific, interest rates and bond yields have plummeted, providing huge savingsfor local businesses and governments.With the improved conditions, foreign investment has been strong and steady. This acts as a feedback loop, as it makes the country even more attractive to newer investors and domestic entrepreneurs.

With conditions like that, it’s only a matter of time before rating agencies hop on board,  bumping up the country’s ratings and bringing more bond buyers who will lend it more money at cheaper interest rates. That makes buying bonds now a bargain deal.

Our recommendation is the Colombia 8.66 Percent 10/2016 Bonds (ISIN: 007027192). It’s both liquid and easy to trade from the US. Plus, it doesn’t mature until 2015, meaning it has time to run, although we expect to see significant profits in the near term. Buy the Colombia 8.66 Percent 10/2016 Bonds.

Disclaimer: The information contained in this premium is current as of 08/10/07.  For the most up-to-date advice and pricing, go to http://www.neilsbonddesk.com// or check your latest Bond Desk issue.