--%>
Assignment Help - homework help

Foreign bonds and Eurobonds

List some of the differences between the foreign bonds and Eurobonds and also describe why Eurobonds make up lion’s share of the international bond market.

E

Expert

Verified

Two segments of international bond market are:

a) Eurobonds and
b) Foreign bonds.

Foreign bond issues are the one that is provided by the foreign borrower to investors in the national capital market and is denominated in that nation’s currency.  Eurobond issue is one that is denominated in particular currency, however, sold to investors in the national capital markets other than the country that issues denominating currency.

Eurobonds make up over 80 percent of international bond market.  Two important causes for this arise from the fact that U.S. dollar is the currency that is frequently sought in the international bond financing.  Firstly, Eurodollar bonds is brought to the market more rapidly as compared to the Yankee bonds since they are not provided to the U.S. investors and therefore do not have to meet the strict SEC registration requirements.  Secondly, Eurobonds are bearer bonds which give anonymity to the owner and therefore provide the mode for evading the taxes over the interest received.  Due to this, investors are usually willing in order to accept the lower yield on Eurodollar bonds as compared to the registered Yankee bonds of comparable terms, where the ownership is recorded.  For borrowers, lower yield means a lower cost of debt service.

   Related Questions in Financial Accounting

  • Q : Equity and social exchange theory What

    What is the difference between the equity theory and the social exchange theory ? Define both the theories in brief.

    		•
  • Q : Accounting profit Normal 0 false false

    Normal 0

  • Q : Flexible and fixed budgets Give a brief

    Give a brief contrast between flexible and fixed budgets?

    		•
  • Q : Leadership qualities required for

    Question Can one person in an organization make a difference? Write an essay on the leadership qualities required for running modern organizations <

    		•
  • Q : Effects of foreigners portfolio

    Since early 1980s, foreign portfolio investors has purchased a considerable portion of the U.S. treasury bond issues.  Explain some short-term and long-term effects of the foreigners’ portfolio investment over the U.S. balance of payments.

    		•
  • Q : Avoidable Interest The book says

    The book says "avoidable interest is the amount of interest cost during the period that a company could theoretically avoid if it had not made expenditures for the asset." This makes it sound like avoidable interest is the total amount of interest paid for an asset. I know it's not but I was wonder

    		•
  • Q : What are equipment expenses What is

    What is equipment expense or what are equipment expenses?

    		•
  • Q : Deposit-loan rate spread in Eurodollar

    Explain, how does deposit-loan rate spread within the Eurodollar market as compared to the deposit-loan rate spread in domestic U.S. banking system and why?

    		•
  • Q : Separately-priced-items strategy

    Problem 1.  The manager of Joe's Menswear has noticed that over the past two holiday seasons their usual sales strategy of marking down prices has not been yielding the boost in revenues that it once did.  JM sell men's suits, dress shirts,

    		•
  • Q : Cause and Solution to international

    Discuss briefly the cause and the solution(s) to international bank crisis including less developed countries.

    		•