International Investments in Czech Bonds of Medium Maturity

by | Sep 14, 2006 | Archives

International investments offer greater potential when leveraged and the five Borrow Low-Deposit High model international investment portfolios we track are up an average 24% on an equal weighted basis. The Emerging Asian equity portfolio is up over 84% even though this last year had the second worst emerging equity market crash in a decade.

This is the third message in a series about a new Borrow Low – Deposit High opportunity borrowing the Czech koruna has emerged.

You can read messages #1 and #2 in the series at International Investments – Out of the Czech Kroner (Koruna) and International Investments in Czech Bonds of Short Maturity

The ultimate sandwich opportunity is an overly strong currency (the koruna may be) that has a lower borrowing rate than the deposit rate of a perhaps overly weak currency (the euro in this case). The koruna is at an all time high versus the euro. You can borrow koruna for 3.75%. You can earn over 5% in very short term euro denominated bonds.

Yesterday’s message looked at borrowing koruna and investing the loan in short term euro denominated bonds that were yielded between 5% and 6%. The return is an attractive 9.62% and very low risk of default or capital loss on bonds that all mature in less than two years.

You can get further information on how to have a Czech koruna loan from Thomas Fischer at

A downside, if you are using Jyske Bank, is that their loan fee of 1% covers 5 years. This reduces profits on short term positions like this. If you buy short term bonds after they mature, you can pay off the loan. You still have the loan available fro three or four years, but the loan fee will have reduced your income in that first year. The return is still attractive but profits can be extended substantially if you invest in euro denominated bonds of greater maturity.

Take these five bonds as an example. Assume (as in yesterday’s message), you invest $100,000 and borrow $200,000 more. The investment and loan is invested $60,000 in each of these five bonds.

CurrencyMaturityBondAppx. Yield as of Sept. 11, 2006
EUR15/03/2011INVENSYS PLC6.73%
EUR03/07/2013GENERAL MOTORS8.86%
EUR01/05/2016NORDIC TEL CO HL7.89%
EUR15/05/2016FS FUNDING9.17%
Total annual return on $300,000
Loan cost on $200,000 in koruna at 3.75%
$ 7,500
Annual return after interest cost

Your annual net return before fees shoots from 9.62% to 16.90%. This is a really high return on bonds that are quite safe. However this return is not as safe as the bonds with shorter maturity dates. There is increased risk of bond defaults with the longer maturity. Plus there is greater capital risk from rising euro interest rates. There is a good chance that euro interest rates will rise in the next few years making these bonds less valuable.

Another increased risk is that the value of the koruna will fall in the short term (due to political uncertainty mentioned in the first message of this series) but then rise in value versus the euro.

However, smart bond traders can make money in three ways if economic events cooperate.

There is a chance that euro interest rates will fall (so these bonds will appreciate), the koruna will drop plus an investor in the position makes earns the higher positive carry.

Say, for example, the koruna dropped 10% versus the euro over the next year and that euro interest rates drop and these bonds rise 10% in value. This position first earns the $16,908 of interest income (after interest costs).

The reduced koruna means that it would only cost $180,000 to pay off the loan next year. Plus the bonds would be worth $30,000 more!

If this were the case the profit would be $66,908. That’s a 66.90% profit potential.

We do not know if this will happen. This portfolio does have greater risk than the safer portfolio we viewed yesterday. Should you take the extra risk? If you can afford to lose more, talk to your banker or financial advisor to see which risk reward scenario best fits you.

Don’t run off and invest yet! We have two more messages in this scenario. Each has even great profit potential. Yes they also have increased chances of loss, but the return potential starts to reach “knock your socks off” territory. Stay tuned and see tomorrow’s message that looks at investing in US dollar bonds with borrowed koruna.

Learn how to double your profit potential with Czech MultiCurrency Sandwich and more. Get a FREE nine chapter report that shows how to calculate all the risk, rewards and fees in using Borrow Low-Deposit High. Learn by tracking many Borrow Low portfolios. See Annual Multicurrency Service

Join Merri and me this November 9-12, 2006 in Ecuador . Meet economic experts from Jyske Bank. Learn more about Borrow Low deposit High. Meet Steve, our man in Ecuador, and learn about products to export. Meet our Ecuadorian attorney, Dr. Andres Cordova, and learn how to own real estate in Galapagos and the cloud forests. Meet our tour operator, Santiago Guamani, and learn how to create your own tour business. See International Business Made EZ

Natural Health Tip – Gain Natural Health through an Autumnal Cleanup. See Health Tip

Autumn is glorious here in the Blue Ridge. Our first leaves began falling this week.

Ecuador Real Estate – Gain Freedom & Friends

The Borrow Low – Deposit High MultiCurrency Sandwich offers great opportunity but the highest opportunity of all is your own international business.

What many readers do not realize is that there are two types of international business, floating and fixed!

A floating international business is one where you can go anywhere and do business. Merri did for years. We used seminars to float. When we were in Switzerland we conducted seminars on how to buy Swiss real estate for example. When we were in the Dominican Republic we conducted real estate tours there. We used our floating business to travel all over the world.

Then we fell in love with the Blue Ridge and Ecuador and did not want to travel so much any more. We then needed as most people do, a fixed international business, as most readers who contact me do!

Why have a fixed international business?

There are many advantages to a fixed international business. First, most people want to be free to pick up and leave where they are if conditions are not good, but they only want to go to another place where they can settle and have a comfortable home, good friends and valuable contacts. Or perhaps they want to do as we do, live in more than one place and have a business that will work with both places.

The Wedding Crasher – the ultimate fast, fixed international business.

Wedding photography is a perfect fixed international business for three reasons. First, people get married everywhere. Second, weddings are one of the most important events for people everywhere.

Third, there are few ways to know so many people, so fast, so intimately, in such a positive way as at a wedding, especially if you are taking the pictures!

This is why I have asked our friend, Todd Smith, to conduct a Wedding Photographer Course next January in Ecuador.

Todd Smith is a wedding photographer extraordinaire. He started his own wedding photography business in and became the leading wedding photographer in Richmond , Virginia / Washington DC area in just three years. Here is what Todd says:

There is a ready group of people in every town that cater to weddings–anyone can join them, if you know where to find them and how to become a helpful member of the team. This is the basis of my marketing approach. I learned how to befriend the wedding vendors and give them what they needed. This provided a basis for many referrals and my growing popularity as a wedding photographer.

This works great for anyone who wants to move to a place and stay. I can certainly show anyone the steps they can take to become famous for wedding photography in the town where they choose to live. I am happy to share what I know about wedding photography and know it will be a passionate discussion. Here is what I teach:

1. Marketing: how to become known as a wedding photographer.

2. Photography Techniques: how to use your camera to best advantage under the challenging lighting and pressure situations at every wedding.

3. Sales: how to price your packages and sell your services to prospective clients.

4. Post-Production Workflow: How to most efficiently manage the thousands of photos you will take and create beautiful albums with less time.

I know a ton about this. Wedding photography can be very profitable, for those willing to take on a lot of work. I am happy to give my experiences for taking the best photos and for marketing and selling within the wedding photography business. My approach is not as aggressive as some photographers, but relies on consistently delivering above and beyond my client’s expectations and on building solid relationships with the other wedding vendors with whom I work. The approach is slow but solid; in three years time I have risen to the top of my profession in Richmond and DC.

The best wedding planners, florists, venues, bakers, caterers, and the only five star hotel here all look to me as one of their favorite photographers, and all of my many clients are more than just satisfied customers. Good photography is the key to my success, but the simple concept of giving has won me more jobs, friends, and satisfied customers than any other principle in my business. I will gladly share the secrets I have used for both taking photos and creating a successful wedding photography business.

There are two more benefits here. First, you get to be involved in such a joyous service. Few events are so important as weddings. Second, there are few ways to quickly be able to rub shoulders with celebrities and important people like Todd has done.

Photo by Todd Smith

You can see Todd’s website at Todd Smith’s Photography

If you are interested in joining Merri, Todd and me in Ecuador go to Wedding Photography Course

Until next message, good international investing and international business!


P.S. Enjoy the following services and courses in Ecuador in the autumn and winter of 2006-2007.

October 12-16, 2006 – Learn how to learn, retain and process information better + Spanish. Super Thinking + Super Memory + Spanish

November 9-12, 2006 – International Business and Investing Made EZ – Ecuador

November 13-15, 2006 – High Andes Tour. Discover the Mystical Andes

January 5-7, 2007 – Inspired Investing beyond Logic. Vedic Astrology in Ecuador

January 8-10, 2007 – Ayurvedic Cleanse.

February 2-8, 2007 – Learn how to Earn anywhere through Import – Export. Gary & Merri Scott’s Import/Export Expedition in Ecuador

Any time that space is available. Rejuvenate your health with a week’s R & R at El Meson.
See R & R at El Meson

Any time that space is available. Stay a month in El Meson and enjoy the full winter sun. El Meson da las Flores Hometel