International Bond ETFs: E.U. Debt Crisis Part Two?

November 17th at 12:00pm by Tom Lydon

Just when you thought Europe’s debt problems were contained come new warnings about big trouble in certain countries. Bond exchange traded funds (ETFs) holding the debt of these countries might be a risky bet.

New rescue plans may be required to cover Portugal and Ireland, but the two countries insist that their finances are in order and have not asked for a rescue package, report Landon Thomas Jr. and James Kanter for The New York Times. Ireland is being pressured to accept aid in hopes of preventing the problem from spreading to other weaker eurozone states.

News from Ireland in particular has been worrisome, at points sparking a sell-off in the Emerald Isle’s debt. In both Portugal and Ireland, borrowing costs have soared, exacerbating a troublesome situation, says Bloomberg.

If you’re on the market for some international Treasury bond exposure, there are funds to sate your appetite. However, we suggest that you assess your risk tolerance and look under the hood before buying to see what, if any, exposure the funds have to troubled countries. Though bailouts have been discussed, nothing is certain. These markets may have a tough row to hoe.

For more information on international sovereign debt, visit our international Treasury bonds category.

  • SPDR Barclays Capital International Treasury Bond (NYSEArca: BWX): holds Italy (11.3%), Germany (10.2%), United Kingdom (4.6%), France (4.6%), Spain (4.4%), Netherlands (4.4%), Greece (4.2%) and Austria (3.6%)
  • SPDR Barclays Cap Short-Term International Treasury Bond (NYSEArca: BWZ): holds Italy (11.1%), Germany (11%), United Kingdom (4.6%), Spain (4.4%), France (4.2%),  Netherlands (4.2%) and Greece (3.4%)
  • iShares S&P/Citi Intl Treasury Bond (NYSEArca: IGOV): Germany (8.2%), France (7.4%), United Kingdom (4.9%), Spain (4.7%), Netherlands (4.7%) and Austria (4.2%)
  • iShares S&P/Citi 1-3 Yr International Treasury Bond (NYSEArca: ISHG): holds Germany (10%), Italy (7.5%), France (6.3%), United Kingdom (4.7%), Netherlands (4.5%), Spain (4.3%) and Greece (4.3%)

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.