The pool of countries with AAA credit ratings keeps shrinking, putting buyers of high-quality government bonds on a global search for stable sources of income.

The ongoing European debt crisis most recently knocked France from the AAA perch and has put much of the Euro zone off limits to investors buying sovereigns as a safe haven. Japan doesn’t look much better with yields barely positive after factoring in inflation.

“Most of the problems are with the old developed markets,” says Tony Norris, co-manager of the Wells Fargo Advantage International Bond Fund. “As soon as one moves away from those economies, government deficits are less, and economic growth is more sustainable.’’

Norris points to Australia and New Zealand as economies supporting sovereign bonds backed by sound finances and attractive yields. WisdomTree AustraliaandNew Zealand Debt Fundprovides focused exposure to these bond markets.

“Australia has run close to a textbook macro policy before, during, and after the global financial crisis,’’ adds Michael Hasenstab, portfolio manager of the $61 billion Templeton Global Bond Fund , which invests primarily in sovereign bonds across developed and emerging markets.Australia is benefiting from low debt levels, prudent economic policies, and its position as a leading exporter to China, he says.

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