Learn about the categories within foreign bonds in this series of financial advice videos.
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What are the categories within foreign bonds? David Marotta: The categories within foreign bonds, first is what's called sovereign debt, where you are loaning money to another country and that country, just like we have treasury bills, other countries have bond investments, that are very high quality and they are backed by the full faith of that country, and within the developed world sovereign debt is fairly stable. You also have foreign corporate debt and foreign corporate debt is when you are loaning money to a foreign company and that will generally pay a higher rate of return than the United States but not always. So, that is another category. And then you have debt in the emerging markets. Emerging markets are emerging market countries. They used to be called the Third World Countries, they used to be called the Developing Nations, and they used to be called the Non-Aligned Nations. So, countries that are not developed countries, things like India, China, Russia, Brazil and they are growing in their economies, they have a great need of capital investments there and make a good return and so you have emerging market bonds which generally pay an even higher rate of return.