Citi Dollars

The extremity of the Citi yield on Abu Dhabi’s investment is intriguing and especially, its differential over typical preferred stocks. Let’s say you are a foreign investor who is concerned about the depreciation of the US dollar. Quite a few real ones are out there so you won’t be alone and I suspect there might be a few residents of the UAE in that crowd. As I keep saying, we are in a death spiral regarding foreign capital and petrodollars. It shouldn’t really be a shocker that countries may desire to unpeg their currencies or avoid investing in US assets for fear that the declining dollar will reduce their value.  But if I was one of them and I feared a further 35% decline in the US dollar, I’d try to negotiate an inflated yield on my next investment.  So if 7.15% was a market yield based upon expectations of a stable dollar - what yield would you demand today to compensate you for your expectation of a 3 or 4 year depreciation of the dollar by another 35%?