Brazilian Government Bonds: How to Profit
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Brazilian government bonds are hot right now. Latin America is the fastest growing emerging region, making Brazil’s currency, the real, perfect for multi currency diversification.
A must read for investors seeking to take advantage of the Brazil’s growth is Gary Scott’s article: Why I Like Brazilian Bonds.
This from Gary: “You can borrow US dollars to make multi currency investments from Jyske Bank at rates a bit above and below 4.5% depending on the amount borrowed.
“You can also buy Brazilian bonds that yield around 11%. For example, earlier this month Jyske Bank offered these two Brazilian government bonds: 1) Brazil 12.5% maturing 2016 yield 10.9%, 2) Brazil 12.5% maturing 2022 yield 11.0%
“If you invest $100,000 (the minimum for a leveraged account) and borrow $100,000 at 4.5%, investing both the loan and original investment in Brazil, with $100,000 in each of these bonds…your average return after fees will be about 10%. That works out to $20,000 a year income on $100,000 invested…or 20% per annum.
“Plus, the Brazilian currency has appreciated enormously versus the U.S. dollar. This could add an extra profit.”
Read on to find out the potential downside to investing in Brazilian government bonds and how much risk this investment carries.
