It's probably bond trading 101 that if a country's capital disappears into a mushroom cloud, that country's bonds will drop in value. This is not necessarily true: distressed-debt traders are buying North Korean bonds (defaulted in 1972, price at 32 cents on the dollar). This seems to be a case in which the probability of repayment is so low that the only thing they're trading on is volatility: North Korea is not just poor -- it's stable -- so a bull market in their bonds either indicates that they're expected to get closer to South Korea or that they're expected to get closer to the kind of chaos that would allow South Korea (or China, or Russia, or an internal Junta) to swoop in and reform things.
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2:36 PM
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