Natixis, the French investment bank and asset manager has determined that the safest country – the country whose bonds are really risk-free – is Sweden, the only one to score a perfect 5. Where do the U.S., Canada, the U.K., Australia and other major countries rank. Take a look.
So says Matthew Boesler (www.businessinsider.com) in edited excerpts from his recent post*.
Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has edited the article below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.
Boesler goes on to say, in part:
Natixis considers five criteria it says are necessary for a country’s bond to play a “risk-free” role in an investor’s portfolio, namely:
- have sound public finances (be solvent);
- not have excessive monetary creation which could result in either an abnormally low level of long-term interest rates in the near future or a risk of inflation in the long term;
- not have a chronic external deficit (due to the small size of industry, a chronic problem of competitiveness), which would lead to a balance of payments crisis;
- not have excessive private debt, which would lead to a financial and banking crisis;
- have sufficient potential growth to carry the debt.
Notice that the safest country, according to Natixis – the only one to score a perfect 5 is Sweden, and the only country with a 4 score is Norway.
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Canada, Germany, Denmark, Switzerland, and Australia all scored 3 out of 5, while Italy, the Netherlands, Austria, Belgium, and Japan scored 2 out of 5.
Rounding out the bottom with 1 scores are the U.S., the U.K., and France, while Spain and Finland got zeroes.
*http://www.businessinsider.com/natixis-risk-free-government-bonds-2012-7#ixzz20NSpCW2M (To access the above article please copy the URL and paste it into your browser.)
Editor’s Note: The above article may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.
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