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Paper to crush the paper tigers

Never let it be said that communists are out of touch with market reality - North Korea, sensing an opportunity to finance itself is to issue its first bond. Ruling party daily Rodong Sinmun says the bond issue "is an important measure to raise funds" to "crush US imperialists", a pitch that is sure to play well with investors.

The 10-year People's Life Bond, will be principally aimed at domestic retail investors. North Korea's finance minister, Mun Il-bong, says North Korea needs to "fully tap inner resources" in order to make the country "an impregnable fortress" and "train the people's army as an invincible army".

To build investor demand, the government is promising regular lottery-style draws for bond holders.

Pariah states such as North Korea have limited external financing opportunities. David Mepham, senior research fellow at the Institute of Public Policy Research, says they often rely on an illicit network of business in minerals, arms or other commodities to finance themselves. Indeed, North Korea recently considered raising funds by exporting nuclear weapons: a profitable if high-risk strategy.

North Korea does have a small amount of foreign loans, which some asset managers trade in.

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