Chapter 12 Quiz. International Bond Market

Your firm has just issued five-year floating-rate notes indexed to six-month U.S. dollar LIBOR plus 1/4 percent. What is the amount of the first semi-annual coupon payment your firm will pay per U.S. $1,000 of face value, if six-month LIBOR is currently 7.2 percent?

$37.25 $37.25 = 0.5 × (0.072 + 0.0025) × $1,000

Because __________ do not have to meet national security regulations, name recognition of the issuer is an extremely important factor in being able to source funds in the international capital market.

Eurobonds

Shelf registration

allows an issuer to preregister a securities issue, and then "shelve" the securities for later sale.

Eurobonds are usually

bearer bonds.

Private placement bond issues

do not have to meet the strict information disclosure requirements of publicly traded issues.

"Yankee" bonds are

dollar-denominated foreign bonds originally sold to U.S. investors.

A "global bond" issue

is a very large international bond offering by a single borrower that is simultaneously sold in several national bond markets.

Publicly traded Yankee bonds must

meet the same regulations as U.S. domestic bonds.

U.S. security regulations require Yankee bonds and U.S. corporate bonds sold to U.S. citizens to be

registered bonds.

Securities sold in the United States to public investors must be registered with the SEC, and a prospectus disclosing detailed financial information about the issuer must be provided and made available to prospective investors. This encourages foreign borrowers wishing to raise U.S. dollars to use

the Eurobond market.