Jump to content

Converting US dollar debt into Yen dollar debt


Recommended Posts

Let's assume this scenario. You have US dollar investments financed by US dollar debt.

You think that the Yen is going to be devalued over time more than the US dollar, the thesis being that their total government debt is several multiples more than their tax revenues.


So you convert the US dollar debt you own into Yen-based debt.


Winning case - the yen falls considerbally faster and you later convert your debt back to US dollars for less than you sold it, thus wiping out some of your debt that finances your investments.


Losing case - the yen falls less than the US dollar and your debt increases.


What are the odds that the US dollar will devalue more than the Yen given the dynamics? I'm referring to what Kyle Bass believes that the Yen will drop much faster than the US dollar over time.


Actuall this is a general strategy question. Should you convert some of your debt into a basket of currences that may devalue faster than the US dollar and thus reduce the holding cost of investments? If not the Yen, what other major currency is likely to devalue faster than the US dollar in the immediate future?

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Create New...