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Sovereign Debt Buyers Search Far and Wide
CNBC.com | March 16, 2012 | 02:20 PM EDT

Hasenstab is also finding opportunity in Europe in places like Ireland. The country has dealt aggressively with its debt problems and its bonds have rebounded strongly from distressed levels. A stronger-than-expected recovery in exports should provide further support to bond prices.

Kenneth Orchard, a sovereign debtanalyst for T. Rowe Price, also likes the sovereign debt from select EU countries.

One is Austria, whose economy has never experienced a housing or credit bubble and enjoys a trade surplus. Another favorite is the Czech Republic, due to its low level of government and consumer debt.

Iceland, which suffered a currency devaluation in 2009 before improving its fiscal policies, is a value pick.

Strong fundamentals also exist in the developed markets of Sweden, Denmark and Norway as well as Hong Kong and Canada, analysts say. The rigor of this latter group, however, has already been recognized, and their bonds are on the expensive side, Norris says.

The EU debt saga has taught bond investors to no longer assume that sovereign means safe. Determining the creditworthiness of government issuers now requires an analysis of economic fundamentals including GDP growth , annual deficit, and long-term debt levels and trade balances.

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