Book

This book is on the pricing of sovereign debt in 17 bond markets across Asia: from Japan in the Far East and Israel in West Asia. The 17 markets include the very large bond market of Japan, which ranks equal among the largest five markets namely in the UK, the USA, Germany and Switzerland. Sovereign debt overhang is allegedly destabilizing the world economy from October 2011, since when the then Eurozone crisis transformed into government debt overhang crisis. This book is about the economics of how the sovereign debts are rated, priced and sold on the basis of perceived risk by investors buying and selling debt instruments. Developed economies' debt burden as a percentage of national income has risen over 25 years from about 40 percent of GDP to the current figure of about 80 percent largely as a result of profligate government spending. So governments are now overhung with loans. One aim of this book is to highlight the sovereign debts of some 17 important economies in Asia, happily none of them seriously as sick as the ones in EU. One clear lesson from this research effort is that the bond markets are quite clever in pricing different risk levels of sovereign debts in Asian countries.

This book identifies how the major and some minor bond markets reacted to interest rate increases and decreases over the recent few years. As every investor knows excessive borrowings relative to the ability to service loans constitute sovereign debt crisis, and it is not limited only to developing countries as shown by the fall in bond values of profligate borrowers such as the Greece. This book is on the pricing of sovereign debt in 17 bond markets across the developed world, ones that have received most of the investors' money as investments.