Investors see Vladimir Putin as safe

There’s a lot of concern on the geopolitical stage that Russian President Vladimir Putin may follow his Chinese counterpart in electing himself as leader for life.

But for investors, that certainty has become a sure thing, as has a “managed economy.

For all the talk about starving Vladimir Putin and, inevitably, Russia of financial resources with sanctions on major state-run companies, Russian bonds have become a must-have.

Not only in Europe where yields are nearly zero, but also among American global bond fund managers that want to get paid for holding debt.

Considering there is about $15 trillion worth of negative-yielding bonds out there, Russia’s 10-year sovereign looks great to everyone, except to the most scornful of the anti-Russia crowd, at around 6.4% in rubles. 

Russia’s 2027 dollar-bond pays 4.25% interest. Germany doesn’t pay at all, and instead yields -0.35%. The U.S. 10-year Treasury bond yields just 1.8%. Those countries also have debt burdens that can spook long-term investors. Russia has practically no debt at all.

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