【精品】multinational financial management（跨国公司财务）ch13 functions of euromarkets（可编辑）.ppt

Multinational Financial Management（跨国公司财务管理）ch13 Functions of EuromarketsI.THE EUROCURRENCY MARKETSTHE EUROMARKETS-the most obvious example of the globalization of financial marketsA.The Eurocurrency Market1.Composed of eurobanks who accept/maintain deposits of foreign currency2.Dominant currency:US$THE EUROCURRENCY MARKETSB.Growth of Eurodollar Marketcaused by restrictive US government policies,especially1.Reserve requirements on deposits2.Special charges and taxes3.Required concessionary loan rates4.Interest rate ceilings5.Rules which restrict bank competition.THE EUROCURRENCY MARKETSC.Eurodollar Creation involves1.A chain of deposits2.Changing control/usage of depositTHE EUROCURRENCY MARKETS3.Eurocurrency loansa.Use London Interbank Offer Rate:LIBOR as basic rateb.Six month rolloversc.Risk indicator:size of margin between cost and rate charged.II.EUROBONDSA.DEFINITION OF EUROBONDSbonds sold outside the country of currency denomination.1.Recent Substantial Market Growth due to use of swaps.a financial instrument which gives 2 parties the right to exchange streams of income over time.EUROBONDS2.Links to Domestic Bond Marketsarbitrage has eliminated interestrate differential.3.Placementunderwritten by syndicates of banksEUROBONDS4.Currency Denominationa.Most often US$b.“Cocktails”allow a basket of currencies5.Eurobond Secondary Market -result of rising investor demand6.Retirementa.sinking fund usuallyb.some carry call provisions.EUROBONDS7.Ratingsa.According to relative riskb.Rating Agencies Moodys,Standard&Poor8.Rationale For Market Existencea.Eurobonds avoid governmentregulationb.May fade as market deregulateEUROBONDSB.Eurobond vs.Eurocurrency Loans1.Five Differencesa.Eurocurrency loans use variable ratesb.Loans have shorter maturitiesc.Bonds have greater volumed.Loans have greater flexibilitye.Loans obtained fasterIII.NOTE ISSUANCE FACILITIES AND EURONOTESA.Note Issuance Facility(NIF)1.Low-cost substitute for loan2.Allows borrowers to issue own notes3.Placed/distributed by banksNOTE ISSUANCE FACILITIES AND EURONOTESB.NIFs vs.Eurobonds1.Differences:a.Notes draw down credit as neededb.Notes let owners determine timingc.Notes must be held to maturityIV.EURO-COMMERCIAL PAPERI.SHORT-TERM FINANCINGA.Euronotes and Euro-Commercial Paper1.Euronotesunsecured short-term debt securities denominated in US$and issued by corporations and governments.2.Euro-commercial paper(CP)euronotes not bank underwrittenEURO-COMMERCIAL PAPERB.U.S.vs.Euro-CPs1.Average maturity longer(2x)for Euro-CPs2.Secondary market for Euro;not U.S.CPs.3.Smaller fraction of Euro usecredit rating services to rate.