Argentine bond sale shows relentless demand for fixed income

After more than a decade bond sale by Argentina shows why the global yields are so low. It’s just relentless demand from investors. So, if you government is market friendly, you can rick the bond market. Argentine bonds have rallies since 2014, when Mauricio Macri got elected for the top job.

This relentless demand from investors is one of the key reason behind low yields globally and financial crisis of 2008/09 just intensified that. Since summer of 2014, more than 50% drop in oil price, should have boosted consumption in United States, as it frees up money to be spent elsewhere. Instead Americans have saved this extra earnings fuelling further demand for fixed income.

Former FED chair Bernanke has also shed some lights on this massive savings glut, to be behind, lower consumption, especially in developed world.

And bond debut after long pause from Argentina shows how massive the size can be.

Yesterday, Argentina closed its book on $15 billion bond sale, which includes various maturities from three years to thirty years, with coupon ranging from 6.25-8%. The sale was oversubscribed in tune of $70 billion.

While partially, the demand was due to lack of Argentine bonds in the market nevertheless it shows massive appetite for fixed income securities.