Wednesday, February 8, 2012

Irish T-Bills

The price of Irish government securities has risen by over 37% since June 2011. This is a huge relief for Ireland because next year it will have to return to the private debt markets to finance its continuing large budget deficits (it currently has IMF and EU bailout funding). This price jump also means good news for funds that bravely invested in the bonds during this last summer's Eurozone crisis. One of the big winners is the Templeton Global Bond Fund, which is part of Franklin Templeton Investments. In all, analysts estimate that the fund has accumulated over $7 billion in Irish bonds, or about 6% of all securities outstanding. The danger in investing this amount of money in a small economy, though, is that the bet can become self fulfilling. As such, the price may be artificially high right now. This could later become a problem for Templeton when it comes time to bank some of its earnings. - Read more about it here: NYTimes