Exotic securities: (True) perpetual Portuguese Government bonds
As some readers know, I have a weakness for “exotic” securities. Those are usually fixed income securities with some uncommon features.
As now Portugal looks like the next Greece, I just had a quick look at Portuguese Government bonds. If one wants to speculate on a potential recovery, the longer dated Govies are usually the better bet, as we have seen in Greece, the haircut is the same for every bond, irrespective of the marurity. However the upside is usually a lot better for long dated bonds (if they survive).
When I checked the long dated Portuguese bonds, I was genuinely surprised:
Portugal has some “true” perpetual bonds outstanding, which I only know from history (I think the UK has some as well).
There seem to be four different series, all issued in the 1940ies during WWII:
– 4.00%, issued 1940 (ISIN PTCON4OE0005)
– 3.50%, issued 1941 (ISIN PTCON1OE0008)
– 3.00%, issued 1942 (ISIN PTCON2OE0007)
– 2.75%, issued 1943 (ISIN PTCON3OE0006)
As far as I could see, the bonds are traded irregulary on the Lisbon stock exchange (LSE), however pricing is quite volatile and amounts (if any) are small. Bid ask is currently somethin like 25/36 for the 2.75% bond ….
For the 4% bonds there were some “real” trades at around 24-25% in January and February. This would be an attractive price if one could get it.
It would be intersting to see if one could actually buy those bonds on the stock exchange. I am also not sure what nominal values those bonds have. A quick Google search didn’t provide any meaningful results.
So as a summary:
It is nothing to invest into right now, but something to look closer, especially if the situation in Portugal gets more severe.