Watching footage of pro-Taleban protesters in the city streets of Pakistan, it might seem odd to think about investing in the country's bonds. Yet for the bravest investors, entering the eye of the storm might reap the greatest investment victories. 'I am a buyer of Pakistani debt. I think it's way too important to ignore,' says Asia Debt Management director Robert Appleby. Pakistan's 2005 sovereign bond, trading at a high yield of 15 per cent, theoretically received a boost when the United States agreed to restructure debt and lifted sanctions on the country on Monday in return for its assistance in fighting terrorist groups based in neighbouring Afghanistan. Further assistance could reap more economic rewards for the country, noted some investors, pointing out that Egyptian bonds improved greatly after the country was granted debt forgiveness in 1991 for helping the US during the Gulf War. Mr Appleby calls it a 'moral hazard' play - assets that will receive support from government in the war on terrorism. It is an idea many are looking at from various angles. Mr Appleby said he had heard proprietary traders mulling other forms of this investment play. There is US airline debt, for instance. Yes, the airlines are facing possibly the worst crisis ever, yet they have also already been allotted US$15 billion in emergency bailout funds from the US. 'If the US says: 'I will stand behind you,' you have a moral hazard play,' said Mr Appleby. Thus traders are wondering how the US$40 billion anti-terrorism fund approved by Congress will be dispersed, if US insurance groups will receive assistance or if any other co-operating developing countries will be awarded debt relief. None of the asset groups in question, however, are seeing much activity as there are few willing to join the front lines of what promises to be a complicated and prolonged battle against Islamic terrorist cells. 'There's a lot of talk, but little action,' said Mr Appleby. 'People - market makers, buyers, sellers, hedge funds - they've assumed a very defensive stance on tradeable assets because of the uncertainty.' That uncertainty is more than justified, as the example of Pakistan shows. Debt relief is not much of a palliative for investors watching the popular response to anti-Taleban leanings by Pakistani President Pervez Musharraf. 'The main issue will really be how they value the short-term economic gains over the political and economic risk over the middle term,' says Bank of America's fixed income research head for Asia, Raja Visweswaran. Mr Appleby, may be one of the few willing to take the plunge - 'It's a bloody unstable place,' said a London-based bond trader. 'Few caps [big investors] are looking at it. . . they can't work out what to do. We're still in flight-to-safety mode.'