Before you actually trade North Korean bonds, you should realize that doing so would be boosting the liquidity in a bond market that is used to finance a regime that oppresses its people. For more on this, read this.
Having said that, here's the deal with the North Korean bond market.
Reuters' Daniel Bases did some investigating, and here's what he found:
Obscure North Korean debt certificates, tied to long-defaulted syndicated loans from the 1970s, traded in the market on Monday with a bid/ask spread around 14/18 cents on the dollar in London, up from a range of 13/15 cents last week, according to London-based Exotix Ltd, a specialist frontier market brokerage firm.
According to Stuart Culverhouse of Exotix, the bonds trade so cheaply because they have been "in default 20 to 30 years."
It's interesting to note that these are pretty serious investors who are playing this obscure and controversial bond market. From the report:
But before mom and pop investors get too excited, Exotix notes that the typical deal size is around $5 million, meaning institutional investors are likely the only ones able to trade the debt.
So, based on what you've just read, it should be no surprise that these markets are highly illiquid. Bases reports that it can take days to find a party to trade with, and this particular market often goes on for weeks with no trades.
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