EECS 1541 Lecture Notes - Lecture 33: Royal Numismatic Society, United States Dollar, United States Treasury Security
24 Jun 2018
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EECS 1541 Lecture 33 Notes
Introduction
Features of Eurobonds
Such U.S.-based MNCs as McDonald’s and Walt Disney commonly issue Eurobonds, and
non-U.S. firms (e.g., Guinness, Nestlé, Volkswagen) also use the Eurobond market as a
source of funds.
Those MNCs without a strong credit record may have difficulty obtaining funds in the
Eurobond market because the limited disclosure requirements may discourage investors
from trusting unknown issuers.
In recent years, governments and corporations from emerging markets such as Croatia,
Hungary, Romania, and Ukraine have frequently utilized the Eurobond market.
New corporations that have been established in emerging markets rely on this market
to finance their growth.
However, they typically pay a risk premium of at least 3 percentage points annually
above the U.S. Treasury bond rate on dollar-denominated Eurobonds.
Eurobonds have several distinctive features.
They are usually issued in bearer form, which means that no records are kept regarding
ownership.
Coupon payments are made yearly.
Some Eurobonds carry a convertibility clause that allows for them to be converted into a
specified number of shares of common stock.
An advantage to the issuer is that Eurobonds typically have few, if any, protective
covenants.
Furthermore, even short-maturity Eurobonds include call provisions.
Some Eurobonds, called floating rate notes (FRNs), have a variable rate provision that
adjusts the coupon rate over time according to prevailing market rates.
Denominations Eurobonds are denominated in a number of currencies.
Document Summary
Such u. s. -based mncs as mcdonald"s and walt disney commonly issue eurobonds, and non-u. s. firms (e. g. , guinness, nestl , volkswagen) also use the eurobond market as a source of funds. An advantage to the issuer is that eurobonds typically have few, if any, protective covenants. Furthermore, even short-maturity eurobonds include call provisions. Some eurobonds, called floating rate notes (frns), have a variable rate provision that adjusts the coupon rate over time according to prevailing market rates. Denominations eurobonds are denominated in a number of currencies. Although the u. s. dollar is used most often (accounting for 70 to 75 percent of. Eurobonds), the euro will likely also be used to a significant extent in the future. Mncs as mcdonald"s and walt disney commonly issue eurobonds, and non-u. s. firms (e. g. , guinness, nestl , and volkswagen) also use the eurobond market as a source of funds. Those mncs without a strong credit record may have difficulty obtaining funds in the.
