Bài giảng môn tài chính quốc tế the international debt markets

Introduced by
Assoc. Pr. Dr. Truong Quang Thong
The Faculty of Banking – UEH
August 2012
INTERNATIONAL FINANCE
TÀI CHÍNH QUỐC TẾ
Lecture 5:
The International Debt Markets
1
About the Int’ Debt Markets

Offering the borrowers a variety of different
maturities, repayment structure, and currencies of
denomination.

The markets and their many different instrument s
vary by source of funding, pricing structure,
maturity and subordination or linkage to other
debt and equidty instrument.
2
Three major sources of debt funding

International bank loan
and syndicated credits.

Euronotes markets.

International bond
markets
3
International bank loans


International bank loans: traditionally sourced in
the Eurocurrency markets.

Eurodollar credits / eurocredits.

Key factor: very narrow spread, often less than
1%.
4
International bank loans – Some special
conditions

Management fee / Arrangement
fee / Up front fee.

Commitment fee

Grace period.

Pre-payment penalty.

Negative pledge.
5
Syndicated credits.

Enabling banks to spread the
risk of very large loans among
a number of banks.

Important because many large

MNCs need credit in excess
of a single bank ‘s loan limit.

Arranged by a lead bank
6
Euronotes markets

Euronote markets: collective term used to
describe short to medium debt instruments
courced in the Eurocurrency markets.

Euronotes facilities.

Euro-Commercial paper (ECP).

Euro medium-term notes (EMTNs)
7
International bond markets

A rich array of innovative instruments created by imaginative investment
bankers.

Key features compared with international banking market: the quantity
and cost of funds.

Two generic classifications:

Eurobonds

Foreign bonds

8
Unique Chracteristics of Eurobond Markets

Absence of regulatory interference:
governments in general have less
stringent limitations for securities
denominated in foreign currencies.

Less stringent disclosure: much less
stringent than those of the SECs.

Favorable tax status: tax anonymity and
flexibility.
9