Government Bond Issues

I am completely ignorant on the subject of government issued bonds. Within the boundaries of a government offering bonds and bond purchases by another party would it be possible to do so secretly? I am talking of hundreds of millions or possibly billions being offered.

Are we talking about bonds issued by a nation, or some political subdivision of a nation like a city, county, state (canton, department, wilaya, …)?

It’s very hard to answer this question without knowing what government you are speaking of. Generally, in the US, the authority of any government to issue bonds is granted through legislation, which virtually always specifies how the bonds are to be sold–and often sets caps on the amount of debt that may be issued by the government The offering process is highly public.

However, a single very rich buyer might be able to purchase a large amount of such bonds. The name of the buyer is usually not public–a matter of financial privacy laws. The broad general facts of the sale are. If the buyer buys bonds through a broker-dealer, they are held in “street name” in almost all cases. That means that the government issuer knows that [some client] of Broker-Dealer owns, say, $20 million worth of the particular series of bonds, but not the name of the actual buyer. And generally, the government doesn’t care, either. They send the interest payments to the broker, which credits them to the account of the bond owner. All perfectly legit and totally legal. The government could, if it wanted, get the name of the bond owner. Usual reason has something to do with a change in the tax status of the bonds.

If, by some chance, you are being offered an opportunity to buy bonds that were “secretly” issued by a government, it’s 999.9 to 1 that you’ve been targetd by a scam. Especally if the word “Nigeria” is in the e-mail.

It isn’t really in the interest of a government to issue bonds secretly. The government wants to get top dollar for the bonds, and a large free market is a good way to make sure that happens. Keeping the sale secret means that only a small number of buyers know about it, and the price is kind of at their mercy.

I suppose a government might want to issue the bonds secretly so as to fund some secret program, but I think Benjamin Franklin had the right idea on conspiracies: “Three can keep a secret, if two are dead.” There are too many people and institutions involved in something like that to keep it secret for long.

Secretly, no.

Privately, yes.

A distinction without too much of a difference.

Thanks for the replies. The government in question is the Mexican federal government, specifically during the latter part of Carlos Salinas presidency. Someone has made the claim that his administration sold dollar denominated bonds without the knowledge of anyone outside of his small circle of confidants, not even members of his Cabinet.