国际财务管理ER 7e Ch12 Outline

Chapter 12
International Bond Market
The World’s Bond Markets: A Statistical Perspective
Foreign Bonds and Eurobonds
Bearer Bonds and Registered Bonds
National Security Regulations
Withholding Taxes
Security Regulations that Ease Bond Issuance
Global Bonds
Types of Instruments
Straight Fixed-Rate Issues
Euro-Medium-Term Notes
Floating-Rate Notes
Equity-Related Bonds
Dual-Currency Bonds
Currency Distribution, Nationality, and Type of Issuer
International Bond Market Credit Ratings
Eurobond Market Structure and Practices
Primary Market
Secondary Market
Clearing Procedures
International Bond Market Indexes
Summary
This chapter introduces and discusses the international bond market. The chapter presents a statistical perspective of the market, noting its size, an analysis of the market segments, the types of instruments issued, the major currencies used to denominate international bonds, and the major borrowers by nationality and type. Trading practices of the Eurobond market are examined, as are credit ratings for international bonds and international bond market indexes.
1. At year-end 2011, there were $69.9 trillion in domestic bonds outstanding and $27.6 trillion in international bonds. The four major currencies that are used to denominate bonds are the euro, U.S. dollar, British pound sterling, and Japanese yen.
2. A foreign bond issue is one offered by a foreign borrower to investors in a national capital market and denom inated in that nation’s currency. A Eurobond issue is one denominated in a particular currency but sold to investors in national capital markets other than the country that issues the denominating currency.
3. The Eurobond segment of the international bond market is roughly four times the size of the foreign bond segment. The two major reasons for this stem from the fact that the U.S. dollar is the currency most frequently sought in international bond financing. First, Eurodollar bonds can be brought to market more quickly than Yankee bonds because they are not offered to U.S. investors and thus do not have to meet the strict SEC registration requirements. Second, Eurobonds are typically bearer bonds that
provide anonymity to the owner and thus allow a means for avoiding taxes on the interest received. Because of this feature, investors are generally willing to accept a lower yield on Eurodollar bonds in comparison to registered Yankee bonds of comparable terms, where ownership is recorded. For borrowers, the lower yield means a lower cost of debt service.
4. Straight fixed-rate bonds are the most frequent type of international bond issue, and floating-rate notes are the second. Other types of issues found in the international bond market are convertible bonds, bonds with equity warrants, and dual-currency bonds.
5. Fitch Ratings, Moody’s Investors Service, and Standard & Poor’s provide credit ratings on most international bond issues. It has been noted that a disproportionate share of Eurobonds have high credit ratings. The evidence suggests that a logical reason for this is that the Eurobond market is accessible only to firms that have good credit ratings to begin with. An entity’s credit rating is usually never higher than the rating assigned to the sovereign government of the country in which it resides. S&P’s analysis of a sovereign includes an examination of political risk and economic risk.
6. New Eurobond issues are offered in the primary market through an underwriting syndicate hired by the borrower to bring the bonds to market. The secondary market for Eurobonds is an over-the-counter arrangement with principal trading done in London.
7. The investment banking firm of J.P. Morgan and Company provides some of the best international bond market indexes that are frequently used for performance evaluations. J.P. Morgan publishes Developed Markets Indexes, Emerging Markets Indexes, and a Global Aggregate Bond Index.。