I am on Chapter 6 of the Intelligent Investor - Portfolio Policy for the Enterprising Investor: Negative Approach. in the specific topic of Foreign Government Bonds.

It gave a brief intro about how historically since 1914 they have a bad history, but every few years or so the market conditions are in it's favour.

This is the direct quote I didn't understand, mainly, it's the number's in here. I don't know what they represent.

But we do know that, if and when trouble should come the owner of foreign obligations has no legal or other means of enforcing his claim.

Right here...

Those who bought Republic of Cuba 4½s as high as 117 in 1953 saw them default their interest and then sell as low as 20 cents on the dollar in 1963.(edited)

What the heck does 4½s mean?

1 Answer 1


4 1/2s refers to a 4 1/2% coupon rate. Citation: http://www.ascecuba.org/asce_proceedings/cubas-hard-currency-debt/

In June, 1937, the Republic of Cuba floated a $44.4 million note with a forty-year maturity and a 4½ percent coupon. It is noteworthy that Cuba was able to issue a note with a forty year maturity, reflecting the bond market’s faith in the long term stability of the Cuban Republic. The 4½ percent coupon, which is low by today’s standards, was offered at 175 basis points above the current twenty-year U.S. Treasury note.

  • Also, does 175 basis points above mean, the priced at 175 of it's principal value?
    – dsomel21
    Commented Jul 8, 2017 at 1:35
  • 2
    A basis point is one hundredth of a percentage point. Thus, 175 basis points above means +1.75%. Put another way, the US Treasury note was at 2.75% at the time.
    – Dancrumb
    Commented Jul 8, 2017 at 12:53

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