跨国公司财务管理基础11
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negotiable securities in public markets. – Financial deregulation has reduced the cost of using financial markets
while the cost of bank borrowing has risen.
Chapter 12
International Financing and National Capital Markets
Chapter 12 Outline
A. Corporate Sources and Uses of Funds B. Eurocurrency Market C. Eurobonds
Chapter 12: International Financing and National Capital Markets
3
12.B Eurocurrency Market (1)
? Eurocurrency – a dollar (Eurodollar) or other freely convertible currency deposited in a bank outside its country of origin. (The prefix euro is not related to the euro currency.)
? Financial intermediary – debt financing specialist that makes loans and issues its own securities or deposits in the market.
– Commercial bank loans for short- and medium-term credit – Privately placed bonds for longer-term credit
– Special charges and taxes on domestic banking transactions; e.g.,FDIC fees;
? Eurobank – a foreign bank or foreign branch of a domestic U.S. bank that accepts deposits and makes loans in foreign countries.
? The Eurocurrency market enables investors to hold short-term claims on commercial banks, which then act as intermediaries to transform deposits into long-term claims on final borrowers.
? Investment banker – a financing specialist that designs and underwrites (markets) the securities
– Investment bankers buy the securities and resell them to the public. – Compensation is the spread between the purchase and selling prices.
? By operating in Eurocurrencies, banks and suppliers of funds avoid certain regulatory costs and restrictions, including
– Reserve requirements that lower a bank's earning asset base;
Chapter 12: International Financing and National Capital Markets
2
12.A Corporate Sources and Uses of Funds (2)
? Privately placed bonds
– Sold directly to a limited number of sophisticated investors – Generally nonnegotiable – Contain covenants (customized loan agreements) that are regularly
– Internally generated cash – Short-term external funds – Long-term external funds
? External finance comes from investors and/or lenders.
– Negotiable securities are publicly issued debt or equity. – Debt accounts for vast majority of external funds.
renegotiated before maturity
? FБайду номын сангаасnancial markets vs. financial intermediaries
– Globally, bank borrowing is declining. – Corporate borrowers are increasingly using securitization, i.e., issuing
Chapter 12: International Financing and National Capital Markets
1
12.A Corporate Sources and Uses of Funds (1)
? Three general sources of corporate funds
while the cost of bank borrowing has risen.
Chapter 12
International Financing and National Capital Markets
Chapter 12 Outline
A. Corporate Sources and Uses of Funds B. Eurocurrency Market C. Eurobonds
Chapter 12: International Financing and National Capital Markets
3
12.B Eurocurrency Market (1)
? Eurocurrency – a dollar (Eurodollar) or other freely convertible currency deposited in a bank outside its country of origin. (The prefix euro is not related to the euro currency.)
? Financial intermediary – debt financing specialist that makes loans and issues its own securities or deposits in the market.
– Commercial bank loans for short- and medium-term credit – Privately placed bonds for longer-term credit
– Special charges and taxes on domestic banking transactions; e.g.,FDIC fees;
? Eurobank – a foreign bank or foreign branch of a domestic U.S. bank that accepts deposits and makes loans in foreign countries.
? The Eurocurrency market enables investors to hold short-term claims on commercial banks, which then act as intermediaries to transform deposits into long-term claims on final borrowers.
? Investment banker – a financing specialist that designs and underwrites (markets) the securities
– Investment bankers buy the securities and resell them to the public. – Compensation is the spread between the purchase and selling prices.
? By operating in Eurocurrencies, banks and suppliers of funds avoid certain regulatory costs and restrictions, including
– Reserve requirements that lower a bank's earning asset base;
Chapter 12: International Financing and National Capital Markets
2
12.A Corporate Sources and Uses of Funds (2)
? Privately placed bonds
– Sold directly to a limited number of sophisticated investors – Generally nonnegotiable – Contain covenants (customized loan agreements) that are regularly
– Internally generated cash – Short-term external funds – Long-term external funds
? External finance comes from investors and/or lenders.
– Negotiable securities are publicly issued debt or equity. – Debt accounts for vast majority of external funds.
renegotiated before maturity
? FБайду номын сангаасnancial markets vs. financial intermediaries
– Globally, bank borrowing is declining. – Corporate borrowers are increasingly using securitization, i.e., issuing
Chapter 12: International Financing and National Capital Markets
1
12.A Corporate Sources and Uses of Funds (1)
? Three general sources of corporate funds