International financial

market instruments

Presented
by:-
Vikesh Jha
Ranjit Singh
Jitendra Sahu
Types

International bonds
Foreign bonds & euro bonds
Global bonds
Straight bonds
Floating rate notes
Convertible bonds
Cocktail bonds
Types

Short & medium term instruments

Euro notes
Euro commercial paper
Medium term euro notes

OTHERS

ADR
GDR
Foreign bonds & euro
bonds
Foreign bonds are underwritten by
the underwriters of the country
where they are issued
Maturity based on the need of
investors of a particular country.
Foreign bonds are subjected to
government regulations in the
country where they are issued.
DIFFERENCES

If an indian company issue bond in the

new york and bond is dominited in US
dollar, is called foreign bonds. But in
case of euro bonds they are dominited in
currency other than the currency of the
country where the bonds are issued.
Foreign bonds underwritten by the
underwriters of the country. Euro bonds
underwritten by the underwritters of
multi nationality
DIFFERENCES

Foreign bonds subjected to

governmental rules and regulations
but euro bonds are free from rules
and regulations.
Foreign bonds is determined keeping
in mind the investors of a particular
country. On
the other hand euro bond are
tailored to the needs of the
multinational investors.
Global bonds

First it issued in 1989 by world bank

It also issued by the company
It dominated in 7 countrys currency
Australian dollar
Canadian dollar
Japanese yen
Swidish crona
Euro
Global bonds
Bonds that can be offered within the
euromarket and several other markets
simultaneously.

Unlike Euro bonds, global bonds can be

issued in the same currency as the country
of issuance.

For example, a global bond could be both

issued in the United States and denominated
in U.S. dollars.
Features

Eurobonds
underwritten by an internationally.
offered simultaneously to investors in a
number of countries .
issued outside the jurisdiction of any single
country.
they are not registered through a regulatory
agency.
Make coupon payments annually.
Large in size offered for simultaneous
placement in different countries
Straight bonds

Interest rate is fixed known as

coupon rate
It is a traditional type of bondi
Its varities:-
-Bullet-redemption bond
-Rising-coupon bond
-Zero-coupon bond
-Currency options
-Bull and bear bonds.
-Debt warrant bonds
Floating rate notes

Does not carry fixed rate of interest

Interest quoted as a premium or
discount to a reference rate(LIBOR)
Interest rate revised periodically.
Perpetual FRNs
Minimax FRN
Drop lock FRN
Flip flop FRN
Mismatch FRN
Hybrid fixed rate reverse FRN
Convertible bonds

Convertible into equity shares

Some convertible bonds have
detachable warrants involving
acquisition rights
Automatic convertibility into a
specified number of shares.
Coctail bonds

Denominated in a mixture of
currencies.
Represent a weighted average of 5
currencies
Investors get currency diversification
risk
Depreciation offset by appreciation
of other.
Euro notes

Like PNs for obtaining short term

funds.
Denominated in any currency other
than the currency of the country
where they are issued.
Documentation facilities are
minimum.
Represent Low cost funding route.
Investor too prefer them in view of
short maturity.
Euro commercial notes

A short-term, debt instrument

Corporations issue eurocommerical
papers in order to tap into the
international money markets for their
financing.

An example of a eurocommercial paper is

a British firm issuing debt in U.S. dollars
to encourage investment from dollar-
investors in international money markets.
Medium term euro notes

Longer maturity between 1 year to 5

years.
Short term euro notes are allowed to roll
over.
Issued to get medium term funds in
foreign currency without any need for
redemption and fresh issue.
It is not underwritten yet there is
provision for underwritting.
It carry fixed interest rate
ADRS

Represents ownership in the shares of a

non-U.S. company that trades in U.S.
financial markets
ADRs carry prices in US dollars,
pay dividends in US dollars,
And can be traded like the shares of US-
based companies.
JPMorgan Citibank
Deutsche Bank
Bank of New York Mellon
GDRS
Global Depository Receipt (GDR) - certificate
issued by international bank, which can be subject
of worldwide circulation on capital markets.
GDR's are emitted by banks, which purchase
shares of foreign companies and deposit it on the
accounts.
Global Depository Receipt facilitates trade of
shares, especially those from emerging markets.
Prices of GDR's are often close to values of realted
shares.
Very similar to GDR's are ADR's.
Procedure of issue
Deciding the size of the issue , the market of the
issue , price of the issue and the formalities
involved.
Approaching a lead manager
Fulfilling the formalities and preparing the
prospectus.
Depositing shares to be issued with the
custodian
Custodian asks depository located in foreign
country to issue DR
Proceeds flow from depository to custodian bank
to issuing company
Documentation

1. The prospectus
2.The depository agreement
3. The agreement between the
custodian and depository.
4.The underwriting agreement
5. A copy of the agreement with the
listing stock exchange.