The international bond market represents a major source of debt financing for the world's governments, international organizations and larger firms. It consist of two types of bonds which is;
- Foreign Bonds - Bonds that issued by a resident of country A but sold to residents of country B and denominated in the currency of country B. Example; Nestle Corporation, a Swiss resident might issue a foreign bond denominated in yen and sold primarily to residents of Japan.
- Eurobond - Bond issued in the currency of country A but sold to residents of other countries. Example; American Airlines could borrow $500 million to finance new aircraft purchases by selling Eurobonds denominated in dollars to residents of Denmark and Germany
The euro and the U.S Dollar are the dominant currencies in the international bond market.
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As the global capital market has evolved so do the international bond market. Syndicates of investment banks, securities firms and commercial banks put together complex packages of international bonds to serve the borrowing needs of large, creditworthy borrowers such as major MNCs, national governments and international organizations. The global bond is one such innovative financial instrument.
As the global capital market has evolved so do the international bond market. Syndicates of investment banks, securities firms and commercial banks put together complex packages of international bonds to serve the borrowing needs of large, creditworthy borrowers such as major MNCs, national governments and international organizations. The global bond is one such innovative financial instrument.
- Global Bond - A large, liquid financial asset that can be traded anywhere at any time. The use of global bond was pioneered by the World Bank which simultaneously sold $ 1.5 billion of U.S dollar-denominated global bonds in North America, Europe and Japan
- Attracted by the World Bank's success, many other large organizations such as Matsushita Electric, the Province of Ontario, CitiCorp and Household Finance has also issued global bonds.
Other innovative opportunities exist in the bond market for example at the borrower's option, bond interest may be paid in one currency and the principal paid in another currency. Or the borrower may secure a lower interest rate by offering inflation protection that pegs the principal repayment to the value of gold or special drawing rights
Current issues in International Bond Market, source from youtube;
Current issues in International Bond Market, source from youtube;