ETFs For European Bond Auctions

There are plenty of things in life that are more exciting than a government bond auction, but Europe's sovereign debt contagion has helped put the spotlight on upcoming auctions by the likes of Italy, Portugal and Spain. On the bright side, Japan said today it will buy euro-denominated bonds to help support the bailout of Ireland and a report by Bloomberg News highlighted that while Italian 10-year yields are blowing out against German bunds, money managers are starting to feel that Italian bonds have been unfairly punished. Still, dark clouds persist. Portugal is planning a sale of 10-year bonds on Wednesday and Portuguese yields are rising to the point where the country may need a bailout, Bloomberg reported. Spain is also scheduled to sell bonds this week and over the coming weeks, something north of 150 billion euros worth of sovereign debt will be auctioned. That means now is the perfect time to look at some ETFs that should be in play thanks to these European bond auctions and we're going beyond country-specific funds here. Sure, the iShares MSCI Italy Index Fund EWI and the iShares Spain Index Fund EWP, among others, will be worth a look, but take a look at the following international bond funds for perhaps even better opportunities. 1) SPDR Barclays Capital International Treasury Bond ETF BWX: BWX is an interesting mix of a little bit of risk and lot of safety as the top-10 holdings are heavy on German and Japanese debt, but with just enough Italian bonds to make this fund worth a look. BWX should in play almost immediately assuming the worst case scenario plays out in the aforementioned Portuguese and Spanish auctions. 2) SPDR DB Intl Government Inflation-Protected Bond ETF WIP: WIP can be viewed as an international TIPS play and the ETF's price action in coming weeks could be very telling about how the market feels about a major Eurozone player, that being France. WIP is heavy on French bonds and British gilts, but has some Japanese sovereigns for a conservative angle. Consider this a longer-ranging play. 3) iShares S&P/Citigroup International Treasury Bond Fund IGOV: IGOV is a very intriguing play and should be worth a look right away because Italy and Spain combine for more than 14% of the ETF's weight. Portuguese debt is also in the mix and an allocation of nearly 5% to Belgium, another possible EU problem child, means IGOV is worth a look now.