How to Earn 56.3% on Government Bonds

by | Oct 19, 2001 | Archives

Here is a report from our Danish eClub advisor on how to enhance your income through Asian dollar and euro bonds.

Dear International Friend,

Recent reports have shown how to earn over 100% with Argentine government bonds and how to get yields of 31.5% through bonds issued by SAS Airlines (owned 49% by the Swedish, Danish and Norwegian governments).

Now a report by eClub advisor Jyske bank shows how to earn 12.87% on US dollar denominated Philippine government bonds (Adobe Acrobat/PDF format).

The report also shows Euro bonds paying 7.59% for those interested in holding Euros. This gives us some interesting options. First one can have a portfolio of these bonds leveraged with Japanese yen loans that cost 2% or less. leverage CAN BE FROM one to four times THE ORIGINAL INVESTMENT and the yield (as does risk) increases with the leverage. One times leverage (For example invest $50,000 and borrow $50,000 to invest in additional bonds) yields 23.74% return before fees (see Jyske for fee schedule) assuming THE DOLLAR versus yen forex and interest rates remain stable. A two times leverage (invest $50,000 and borrow $100,000) yields 43.61%, Three times 45.48% and the riskiest four times leverage offers 56.3%. Risks include potential default by THE Philippine government, higher interest rates that devalue the capital value of the bonds before maturity and reduce the purchasing power of the income, increased yen interest rates and a rising value of the yen which increases the pay of cost of the loan.

Yet the return is pretty attractive for taking the added risk.

Here is another high return, but safer play. Invest in all three TYPE bonds, Argentina, SAS Airlines and the Philippine government. This offers a mixture of quality from A quality (SAS) to the lowest grade (Argentina) with the Philippines at BBB falling in between. An even mix of these bonds gives geographic diversity and still yields 13.27% return (in US dollars) on a non leveraged basis. Those wanting more safety take more of the SAS bonds and less Argentina. Those wanting to kick up the potential (for more risk) overweight at the riskier Latin end.

How about leverage wit this mix? A two times loan gives a 35.9% yield. For a complete understanding of how to use this leverage take my course Borrow Low Deposit High or contact Jyske bank or go to Jyske's website at

Until next message, good investing!