In a no-yield world, many perceive themselves as “forced buyers of risk” (FOBOR). By way of example, the Financial Times reported the following note from BofA Merrill Lynch:
In a world of zero rates, where $19.4 trillion of government bonds (that’s 48% of the total market) is trading below 1%, it’s little wonder the “lust for yield” is as strong as it is. Last week Rwanda offered 6.875% 10-year bonds to borrow $400mn, an amount equivalent to 5.5% of its 2012 GDP. The offer was 9-10X oversubscribed. And Panama successfully issued a $750mn 40-year bond with a 4.3% coupon (note that in the past 50 years the US 30-year Treasury bond has traded below 4.3% for just 10% of the period).
In what universe does it make sense for people to fight to loan Rwanda money at 6 7/8 percent?
Above the Market 
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