According to the Bank for International Settlements, the international debt market involves the buying and selling of corporate and government bonds issued by non-residents of the local debt market. In other words, an international debt market is a bond market where only foreign bonds are traded. Economy Watch estimated in 2010 that the international bond market was valued at $47 trillion.
Upside and Downside
International bonds are generally higher risk due to regional instability, currency fluctuations and interest rate fluctuations; however, higher risk investments generally provide greater returns. International debt market investors can minimize their risk by diversifying their portfolios by including a variety of bond types, industry types, nations, currencies and market types.
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