International Trade Finance Week 4, Chapter 3 Bonds International Bond Market Multinational companies issue bonds internationally because of: - Narrow investor base at domestic level - Strong demand in international market - To finance their foreign projects in that country’s currency Participants of international bond markets are: - Commercial banks - Mutual fund companies - Pension Funds Foreign Bonds Issued by borrower foreign to the country where the bond is placed - Example, A U.S. Company issues a bond denominated in Japanese Yen, which is sold to investors in japan Foreign bonds are sometimes, also referred by parallel bonds Eurobond Market - A bond issued in a currency other than the currency of the country or market in which it is issued. (a Eurobond denominated in Japanese Yen anywhere except japan) - Eurobonds provide the flexibility to the issuer to choose country. - Widely used by multinational companies new corporations establishing in emerging markets to get finance -
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