French government bond interest rates fell 30 to record lows, less than 50 basis points above German government bond rates.

Until recently, the bond markets treated all euro sovereign debts as virtually equal, not raising interest rates on high debt countries until the possibility of default became clear.

Italian bond rates had already been falling before ECB President Mario Draghi announced the conditional bond buying plans.

A sovereign debt restructuring mechanism, collective action clauses in sovereign bond contracts and a code of conduct for private creditors and sovereign debtors have all been proposed.

The market s reaction was to send Spanish government bond rates even higher.

Some sort of Brady bond to reduce and extend excessive sovereign debt will be necessary.

But the immediate effect on long term bond rates has not been encouraging.

But, by early spring, bond rates for Spain and Italy were again approaching unsustainable levels.

Noting the increasing voluntary use of collective action clauses in sovereign bond contracts by both developing and developed countries,

The healing process is also evident in Europe, though, unfortunately, it is effectively limited only to sovereign bond markets.

Either way, interest rates would have to fall in order for world bond markets to clear.

First, the ECB s renewed bond purchases must express the clear intention of reducing sovereign interest rates to sustainable levels, which are at least 200 basis points below their July averages. A high level German diplomat reportedly dismissed Spain s 6.5 7 interest rates recently, on the grounds that Spain borrowed at nearly the same rates in the 1990 s.

While Europe has succeeded in stabilizing its sovereign bond markets, financial intermediation for small and medium size enterprises remains highly disrupted.

The ECB s announcement of a new program to purchase sovereign bonds has lowered market interest rates.

So why are an increasing number of developing countries resorting to sovereign bond issues? And why have lenders suddenly found these countries desirable?

Investors subsequent efforts to price in the risk of a eurozone breakup not the volume of sovereign debt caused bond yields to spike.

My name is Bond, Jamal Bond.

Ahoy, Mr. Bond! Ahoy, Mr. Bond!

Let's say they bond here, they bond here, and they bond here.

And we've already explored that the bond markets are expressing that, by asing for higher and higher interest rates from Greece these are the long term interest rates in Greece.

To the extent that this new lending is based on Africa s strengthening economic fundamentals, the recent spate of sovereign bond issues is a welcome sign.

The interest rates on the euro denominated sovereign debt of the twelve euro zone governments are all very similar.

Bond

Creates a bond, creates a bond of respect.

When that happens, inflationary expectations will mount, long term government bond yields will rise, mortgage rates and private market rates will increase, and one would end up with stagflation (inflation and recession).

Clearly, the Fed s objective is to increase bond prices, in the hope that lower long term interest rates will propel corporate investment.

But it is logical to consider that restoring the sustainability of public finances can have strongly positive effects on confidence and bond rates.

So what will happen when central banks start raising interest rates? In 1994, rising short term rates caused increases in long term rates and declines in long term bond prices that were at least double what standard models at the time were predicting.

Bond offering

Bond Labels

Bond number

Bond Radius

Bond Length

Bond Angle

Bond Length

Bond Radius

Bond Paper

Bond paper

A bond?

Mr. Bond?

That is likely to be a money losing strategy unless an investor is sagacious or lucky enough to sell the bond before interest rates rise. If not, the loss in the price of the bond would more than wipe out the extra interest that he earned, even if rates remain unchanged for five years.

Countries contemplating joining the bandwagon of sovereign bond issuers would do well to learn the lessons of the all too frequent debt crises of the past three decades.

So they'll bond let's say they bond, I was doing yellow.

Under the OMT program, the ECB can replace foreign outflows from sovereign bond markets through direct purchases, putting Spain on par with non eurozone countries like the United Kingdom.

To ensure that their sovereign bond issues do not turn into a financial disaster, these countries should put in place a sound, forward looking, and comprehensive debt management structure.