How to Buy Foreign Bonds
- 1). Review foreign bond types. Government bonds are known as sovereign bonds and pay interest in regular intervals. These bonds are usually priced in the currency of the issuing country.
- 2). Review the Brady bond. The Brady bond is a type of international bond that is denominated in U.S. dollars and is designed to reduce the risk of investing in developing countries. These bonds usually have the backing of the U.S. Treasury as collateral. Ask your banker or online broker if they have any Brady bonds in inventory for sale to individual investors.
- 3). Research private foreign bonds. In addition to government bonds, private companies also have debt issuances.
- 4). Invest in a foreign bond fund. If you are an inexperienced trader, the best way to own foreign bonds is to buy a professionally managed mutual fund that specializes in foreign bond issuances. Examples of these include the T. Rowe Price International Bond (FUND: RPIBX), Templeton Global Income (NYSE: GIM) and Aberdeen Global Income (AMEX: FCO).
- 5). Buying foreign bonds directly is more difficult than buying U.S. treasurie,s which can be purchased online. If a brokerage does sell them, the commission mark-up is often very high. Contact the Department of Finance for the country of choice for government bonds or the company of issuance if for private corporate debt.
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