国际金融英文课件：Chapter_12 International Bond Market

1、Chapter Objective:This chapter continues discussion of international capital markets with a discussion of the structure of the international bond market.12 Chapter TwelveInternational Bond Market12-0Chapter OutlinelThe Worlds Bond Markets: A Statistical PerspectivelForeign Bonds and EurobondslTypes

2、of InstrumentslCurrency Distribution, Nationality, Type of IssuerlInternational Bond Market Credit RatingslEurobond Market Structure & PracticeslInternational Bond Market IndiceslThe Worlds Bond Markets: A Statistical PerspectivelForeign Bonds and EurobondslTypes of InstrumentslCurrency Distribution

3、, Nationality, Type of IssuerlInternational Bond Market Credit RatingslEurobond Market Structure & PracticeslInternational Bond Market IndiceslThe Worlds Bond Markets: A Statistical PerspectivelForeign Bonds and EurobondslTypes of InstrumentslStraight Fixed-Rate IssueslEuro-Medium-Term NoteslFloatin

4、g-Rate NoteslEquity-Related BondslDual-Currency BondslCurrency Distribution, Nationality, Type of IssuerlThe Worlds Bond Markets: A Statistical PerspectivelForeign Bonds and EurobondslTypes of InstrumentslCurrency Distribution, Nationality, Type of IssuerlInternational Bond Market Credit RatingslEur

5、obond Market Structure & PracticeslInternational Bond Market IndiceslThe Worlds Bond Markets: A Statistical PerspectivelForeign Bonds and EurobondslTypes of InstrumentslCurrency Distribution, Nationality, Type of IssuerlInternational Bond Market Credit RatingslEurobond Market Structure & PracticeslI

6、nternational Bond Market IndiceslThe Worlds Bond Markets: A Statistical PerspectivelForeign Bonds and EurobondslTypes of InstrumentslCurrency Distribution, Nationality, Type of IssuerlInternational Bond Market Credit RatingslEurobond Market Structure & PracticeslPrimary MarketlSecondary MarketlClear

7、ing ProcedureslThe Worlds Bond Markets: A Statistical PerspectivelForeign Bonds and EurobondslTypes of InstrumentslCurrency Distribution, Nationality, Type of IssuerlInternational Bond Market Credit RatingslEurobond Market Structure & PracticeslInternational Bond Market Indices12-1lThe Worlds Bond M

8、arkets: A Statistical PerspectivelForeign Bonds and EurobondslTypes of InstrumentslCurrency Distribution, Nationality, Type of IssuerlInternational Bond Market Credit RatingslEurobond Market Structure & PracticeslInternational Bond Market IndicesChapter OutlineThe Worlds Bond Markets: A Statistical

9、Perspective:lThe total market value of the worlds bond markets are about 50% larger than the worlds equity markets. lThe U.S. dollar, the euro, the pound sterling, and the yen are the four currencies in which the majority of domestic and international bonds are denominated. lProportionately more dom

10、estic bonds than international bonds are denominated in the dollar (44.2 percent versus 36.1 percent) and the yen (15.4 percent versus 2.6 percent) while more international bonds than domestic bonds are denominated in the euro (47.5 percent versus 21.5 percent) and the pound sterling (8.3 percent ve

11、rsus 2.5 percent).12-2Amounts of Domestic and International Bonds Outstanding(As of Mid-Year 2007 in Billions of U.S. Dollars)CurrencyDomesticPercentInternationalPercentTotalPercentU.S. $18,596.1044.2%7,129.2036.1%25,725.3041.6%Euro 9,032.5021.5%9,395.8047.5%18,428.3029.8%Pound 1,033.702.5%1,635.208

12、.3%2,668.904.3%Yen 6,478.2015.4%504.82.6%6,983.0011.3%Other6,968.2016.5%1,099.005.6%8,067.2013%Total42,108.70100%19,764.00100%61,872.70100%12-3Foreign Bonds and EurobondslForeign bondslGerman MNC issue dollar-denominated bonds to U.S. investors.lYankee bondslSamurai bondslBulldogs bondslEurobonds lD

13、utch borrower issue dollar-denominated bonds to U.K. investors.lThe markets for foreign bonds and Euro-bonds operate in parallel with domestic national bond markets and compete with each other.Bearer Bonds and Registered BondslBearer Bonds are bonds with no registered owner. As such they offer anony

14、mity but they also offer the same risk of loss as currency.lRegistered Bonds: the owners name is registered with the issuer.lEurobonds are usually bearer bonds.lU.S. security laws require Yankee bonds and US corporate bonds sold to U.S. citizens to be registered.12-5Global BondslA global bond is a v

15、ery large international bond offering by a single borrower that is simultaneously sold in North America, Europe and Asia.lGlobal bond issues were first offered in 1989.lGlobal bonds denominated in U.S. dollars and issued by U.S. corporations trade as Eurobonds overseas and domestic bonds in the U.S.

16、lGlobal bonds offerings enlarge the borrowers opportunities for financing at reduced costs.lPurchasers, mainly institutional investors, desire the increased liquidity of the issues and have been willing to accept lower yields. 12-6Deutsche Telekom Global BondlThe largest corporate global bond issue

17、to date is the $14.6 billion Deutsche Telekom multicurrency offering. lThe issue includes lthree U.S. dollar tranches with 5-, 10-, and 30-year maturities totaling $9.5 billion, ltwo euro tranches with 5- and 10-year maturities totaling 3 billion, ltwo British pound sterling tranches with 5- and 30-

18、year maturities totaling 950 million, land one 5-year Japanese yen tranche of 90 billion. 12-7Types of InstrumentslStraight Fixed Rate DebtlFloating-Rate NoteslEquity-Related BondslZero Coupon BondslDual-Currency Bonds lComposite Currency Bonds12-8Straight Fixed Rate DebtlThese are “plain vanilla” b

19、onds with a specified coupon rate and maturity and no options attached.lSince most Eurobonds are bearer bonds, coupon dates tend to be annual rather than semi-annual.lThe vast majority of new international bond offerings are straight fixed-rate issues.12-9Floating-Rate NoteslJust like an adjustable

20、rate mortgage.lCommon reference rates are 3-month and 6-month U.S. dollar LIBORlSince FRN reset every 6 or 12 months, the premium or discount is usually quite smalll2nd most common type of international bond issue.as long as there is no change in the default risk.12-10Equity-Related BondslThere are

21、two types of equity-related bonds: convertible bonds and bonds with equity warrants. 12-11Convertible BondslA convertible bond issue allows the investor to exchange the bond for a predetermined number of equity shares of the issuer. lThe floor-value of a convertible bond is its straight fixed-rate b

22、ond value. lConvertibles usually sell at a premium above the larger of their straight debt value and their conversion value. lInvestors are usually willing to accept a lower coupon rate of interest than the comparable straight fixed coupon bond rate because they find the conversion feature attractiv

23、e. 12-12Bonds with Equity WarrantslThese bonds allow the holder to keep his bond but still buy a specified number of shares in the firm of the issuer at a specified price.lThey can be viewed as straight fixed-rate bonds with the addition of a call option (or warrant) feature. lThe warrant entitles t

24、he bondholder to purchase a certain number of equity shares in the issuer at a prestated cash price over a predetermined period of time.lWith a convertible bond, you surrender the bond to get the shares. Here you pay cash and keep the bond.12-13Zero Coupon BondslZeros are sold at a large discount fr

25、om face value because there is no cash flow until maturity.lIn the U.S., investors in zeros owe taxes on the “imputed income” represented by the increase in present value each year, while in Japan, the gain is a tax-free capital gain.lPricing is very straightforward:PV = PAR(1 + r)T12-14Dual-Currenc

26、y BondslA straight fixed-rate bond, with interest paid in one currency, and principal in another currency.lJapanese firms have been big issuers with coupons in yen and principal in dollars.lGood option for a MNC financing a foreign subsidiary.0134NN 1$12-15InstrumentStraight Fixed-RateFloating Rate

27、NoteConvertible BondAnnualFixedCurrency of issue or conversion to equity shares.Straight fixed rate with equity warrantsAnnualFixedCurrency of issue plus conversion to equity shares.ZerononezeroCurrency of issueDual Currency BondAnnualFixedDual currencyFrequency of PaymentAnnualSize of CouponPayoff

28、at MaturityCharacteristics of International Bond Market InstrumentsCurrency of issueFixedEvery 3 or 6 monthsVariableCurrency of issue12-16Currency Distribution of International Bond Amounts Outstanding(As of Mid-Year 2007 in U.S. $Billions)Currency20032004200520062007 Euro4,834.506,216.006,317.808,3

29、10.109,395.80U.S. $4,492.504,906.305,380.506,400.607,129.20Pound778.7981.81,063.701,450.001,635.20Yen488.6530.5472.2487.3504.8Swiss franc195.6227.9208.8253.8273.5Canadian dollar79.3112.6146.7178232.6Other233.3306.7394.3649.3592.9Total11,102.5013,281.8013,984.0017,569.1019,764.0012-17Distribution of

30、International Bond Offerings20032004200520062007Australia162225.5259.3352405Canada267.2294.8311346.7401.1France700.8888.5937.81,197.201,309.20Germany1,810.302,110.202,071.802,463.802,612.80Italy510.5716.4705.1903.4996.6Japan255.2280.7261.2304.1316.3Netherlands532.8652.8680.7870.4961.4U.S.1,032.101,2

31、67.901,426.301,881.302,117.00U.K.3,011.803,262.703,446.304,297.304,947.10Other Developed Countries1,559.002,090.702,320.903,191.703,774.20Off-shore Centers128.9151.4173.3195.7213Developing Countries630.8790.9855.6989.81,109.50International Institutions501549.3534.7575.7600.8Total (in U.S. $Billions)

32、11,102.5013,281.8013,984.0017,569.1019,764.0012-18Distribution of International Bond Offerings by Type of Issuer 20032004200520062007Financial institutions8,032.509,756.7010,509.0013,537.5015,404.50Governments1,122.301,413.801,431.901,621.901,739.90International 501.1549.3534.7575.8600.8Corporate is

33、suers1,446.601,562.101,508.501,834.002,019.00Total (in U.S. Billions)11,102.5013,281.8013,984.0017,569.1019,764.0012-19International Bond Market Credit RatingslFitch IBCA, Moodys and Standard & Poors sell credit rating analysis.lFocus on default risk, not exchange rate risk.lAssessing sovereign debt

34、 focuses on political risk and economic risk.12-20Eurobond Market StructurelPrimary MarketlVery similar to U.S. underwriting.lSecondary MarketlOTC market centered in London.lComprised of market makers as well as brokers.lMarket makers and brokers are members of the International CapitalMarket Associ

35、ation (ICMA), a self-regulatory body based in Zurich.lClearing ProcedureslEuroclear and Cedel handle most Eurobond trades.12-21Eurobond Practices: Primary MarketlA borrower desiring to raise funds by issuing Eurobonds to the investing public will contact an investment banker and ask it to serve as t

36、he lead manager of an underwriting syndicate that will bring the bonds to market. lThe underwriting syndicate is a group of investment banks, merchant banks, and the merchant banking arms of commercial banks that specialize in some phase of a public issuance. lThe lead manager will sometimes invite

37、co-managers to form a managing group to help negotiate terms with the borrower, ascertain market conditions, and manage the issuance.12-22Eurobond Practices: Primary MarketlThe managing group, along with other banks, will serve as underwriters for the issue, that is, they will commit their own capital to buy the issue from the borrower at a discount from the issue price. lThe discount, or underwriting spread, is typically in the 2 to 2.5 percent range. By comparison, the spread averages about 1 percent for domestic issues. lMost of the underwriters, along wi