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INTERNATIONAL BOND
NIJIL C V
MEANING OF 'INTERNATIONAL
BOND'
ī‚´ A bond issued in a country or currency other than that of the investor or broker. They
include Eurobonds, which are issued in a foreign currency, foreign bonds, which are
issued by a foreign government or corporation in the domestic market, and global
bonds, which are issued in both domestic and international markets.
2
FEATURES OF
INTERNATIONAL BOND
1) It is a debt market
2) It is a fund raising market
3) Fixed income instrument
4) Issued in foreign currency
5) It channelizing savings
3
WHAT IS DOMESTIC BOND
ī‚´ Bonds help acquire orders and, in many cases, are a precondition for successful
conclusion of a contract.
ī‚´ For all entrepreneurs planning to enter tenders and conclude contracts for the delivery
of goods or services we offer a wide range of domestic contract bonds.
4
ī‚´ Bonds issued in the country and currency in which they
are traded. Unlike international bonds, domestic bonds are not
subject to currency risk. They usually carry less risk, as the
regulatory and taxation requirements are usually known
to investors in domestic bonds, or at least to their brokers and
accountants.
TYPES OF DOMESTIC
BOND
īƒ˜Public Sector Undertaking Bonds
īƒ˜Corporate Bonds
īƒ˜Financial Institutions and Banks
īƒ˜Emerging Bond Markets
īƒ˜Tax-Savings Bonds
6
ī‚´ WHAT IS EUROBOND ?
ī‚´A euro bond is a debt contract between a borrower and
an investor, which records the borrower's obligation to
pay interest and the principal amount of the bond on
specified dates.
ī‚´For -A firm issuing Yen bonds outside Japan .
When a Japanese firm issues yen bonds in the Euro
market.
ī‚´
7
INTRODUCTUON ON FOREIGN BOND
ī‚´ Foreign bonds are regulated by the domestic market authorities and are usually given
nicknames that refer to the domestic market in which they are being offered.
ī‚´ A foreign bond allows an investor a measure of international diversification without
subjection to the risk of changes in relative currency values.
8
Straight fixed-rate
ī‚´ bond issues have a designated maturity date at which the principal
of the bond issue is promised to be repaid. During the life of the
bond, fixed coupon payments that are some percentage rate of the
face value are paid as interest to the bondholders. This is the
major international bond type. Straight fixed-rate Eurobonds are
typically bearer bonds and pay coupon interest annually.
Floating-rate notes (FRNs)
ī‚´ are typically medium-term bonds with their coupon payments
indexed to some reference rate. Common reference rates are
either three-month or six-month U.S. dollar LIBOR. Coupon
payments on FRNs are usually quarterly or semi-annual, and in a
accord with the reference rate.
Euro-Medium-Term Notes (Euro-
MTNs):
Fixed rate notes with maturities from less than a year to about ten
years
Euro MTN issue is partially sold on a continuous basis
convertible bond
ī‚´ A issue allows the investor to exchange the bond for a pre-
determined number of equity shares of the issuer. The floor value
of a convertible bond is its straight fixed-rate bond value.
Convertibles usually sell at a premium above the larger of their
straight debt value and their conversion value. Additionally,
investors are usually willing to accept a lower coupon rate of
interest than the comparable straight fixed coupon bond rate
because they find the call feature attractive.
Bonds with equity warrants
ī‚´ can be viewed as a straight fixed-rate bond with the addition of a
call option (or warrant) feature. The warrant entitles the
bondholder to purchase a certain number of equity shares in the
issuer at a pre-stated price over a pre-determined period of time.
Zero coupon bonds
ī‚´ are sold at a discount from face value and do not pay any coupon
interest over their life. At maturity the investor receives the full
face value. Another form of zero coupon bonds are stripped
bonds.
ī‚´ .
Stripped bond
ī‚´ It is a zero coupon bond that results from stripping the coupons
and principal from a coupon bond. The result is a series of zero
coupon bonds represented by the individual coupon and principal
payments
Dual-currency bond
ī‚´ A is a straight fixed-rate bond which is issued in one currency and
pays coupon interest in that same currency. At maturity, the
principal is repaid in a second currency. Coupon interest is
frequently at a higher rate than comparable straight fixed-rate
bonds. The amount of the dollar principal repayment at maturity
is set at inception; frequently, the amount allows for some
appreciation in the exchange rate of the stronger currency. From
the investor’s perspective, a dual currency bond includes a long-
term forward contract.
Composite currency bonds
ī‚´ are denominated in a currency basket, such as SDRs or ECUs,
instead of a single currency. They are frequently called currency
cocktail bonds. They are typically straight fixed-rate bonds. The
currency composite is a portfolio of currencies: when some
currencies are depreciating others may be appreciating, thus
yielding lower variability overall.
Accrual bond
A bond on which interest accrues, but
is not paid to the investor during the
time of accrual. The amount of
accrued interest is added to the
remaining principal of the bond and
is paid at maturity.
Call price bond
The stated price at which a bond may be repurchased, by use of a call
feature, prior to maturity.
Debenture bond
â€ĸ An unsecured bond whose holder has the claim of a general
creditor on all assets of the issuer not pledged specifically
to secure other debt. Compare subordinated debenture
bond, and collateral trust bonds.
Discount bond
â€ĸ Debt sold for less than its principal value. If a discount bond pays
no interest, it is called a zero coupon bond.
ī‚´ A bond selling below par.
ī‚´ A bond that is valued at less than its face amount.
Face value bond
â€ĸ The value that appears on the face of a bond that indicates
the bond s value at its maturity date.
Global bonds
â€ĸ Bonds that are designed so as to qualify for immediate
trading in any domestic capital market and in the
Euromarkets

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Types of international bonds

  • 2. MEANING OF 'INTERNATIONAL BOND' ī‚´ A bond issued in a country or currency other than that of the investor or broker. They include Eurobonds, which are issued in a foreign currency, foreign bonds, which are issued by a foreign government or corporation in the domestic market, and global bonds, which are issued in both domestic and international markets. 2
  • 3. FEATURES OF INTERNATIONAL BOND 1) It is a debt market 2) It is a fund raising market 3) Fixed income instrument 4) Issued in foreign currency 5) It channelizing savings 3
  • 4. WHAT IS DOMESTIC BOND ī‚´ Bonds help acquire orders and, in many cases, are a precondition for successful conclusion of a contract. ī‚´ For all entrepreneurs planning to enter tenders and conclude contracts for the delivery of goods or services we offer a wide range of domestic contract bonds. 4
  • 5. ī‚´ Bonds issued in the country and currency in which they are traded. Unlike international bonds, domestic bonds are not subject to currency risk. They usually carry less risk, as the regulatory and taxation requirements are usually known to investors in domestic bonds, or at least to their brokers and accountants.
  • 6. TYPES OF DOMESTIC BOND īƒ˜Public Sector Undertaking Bonds īƒ˜Corporate Bonds īƒ˜Financial Institutions and Banks īƒ˜Emerging Bond Markets īƒ˜Tax-Savings Bonds 6
  • 7. ī‚´ WHAT IS EUROBOND ? ī‚´A euro bond is a debt contract between a borrower and an investor, which records the borrower's obligation to pay interest and the principal amount of the bond on specified dates. ī‚´For -A firm issuing Yen bonds outside Japan . When a Japanese firm issues yen bonds in the Euro market. ī‚´ 7
  • 8. INTRODUCTUON ON FOREIGN BOND ī‚´ Foreign bonds are regulated by the domestic market authorities and are usually given nicknames that refer to the domestic market in which they are being offered. ī‚´ A foreign bond allows an investor a measure of international diversification without subjection to the risk of changes in relative currency values. 8
  • 9. Straight fixed-rate ī‚´ bond issues have a designated maturity date at which the principal of the bond issue is promised to be repaid. During the life of the bond, fixed coupon payments that are some percentage rate of the face value are paid as interest to the bondholders. This is the major international bond type. Straight fixed-rate Eurobonds are typically bearer bonds and pay coupon interest annually.
  • 10. Floating-rate notes (FRNs) ī‚´ are typically medium-term bonds with their coupon payments indexed to some reference rate. Common reference rates are either three-month or six-month U.S. dollar LIBOR. Coupon payments on FRNs are usually quarterly or semi-annual, and in a accord with the reference rate.
  • 11. Euro-Medium-Term Notes (Euro- MTNs): Fixed rate notes with maturities from less than a year to about ten years Euro MTN issue is partially sold on a continuous basis
  • 12. convertible bond ī‚´ A issue allows the investor to exchange the bond for a pre- determined number of equity shares of the issuer. The floor value of a convertible bond is its straight fixed-rate bond value. Convertibles usually sell at a premium above the larger of their straight debt value and their conversion value. Additionally, investors are usually willing to accept a lower coupon rate of interest than the comparable straight fixed coupon bond rate because they find the call feature attractive.
  • 13. Bonds with equity warrants ī‚´ can be viewed as a straight fixed-rate bond with the addition of a call option (or warrant) feature. The warrant entitles the bondholder to purchase a certain number of equity shares in the issuer at a pre-stated price over a pre-determined period of time.
  • 14. Zero coupon bonds ī‚´ are sold at a discount from face value and do not pay any coupon interest over their life. At maturity the investor receives the full face value. Another form of zero coupon bonds are stripped bonds. ī‚´ .
  • 15. Stripped bond ī‚´ It is a zero coupon bond that results from stripping the coupons and principal from a coupon bond. The result is a series of zero coupon bonds represented by the individual coupon and principal payments
  • 16. Dual-currency bond ī‚´ A is a straight fixed-rate bond which is issued in one currency and pays coupon interest in that same currency. At maturity, the principal is repaid in a second currency. Coupon interest is frequently at a higher rate than comparable straight fixed-rate bonds. The amount of the dollar principal repayment at maturity is set at inception; frequently, the amount allows for some appreciation in the exchange rate of the stronger currency. From the investor’s perspective, a dual currency bond includes a long- term forward contract.
  • 17. Composite currency bonds ī‚´ are denominated in a currency basket, such as SDRs or ECUs, instead of a single currency. They are frequently called currency cocktail bonds. They are typically straight fixed-rate bonds. The currency composite is a portfolio of currencies: when some currencies are depreciating others may be appreciating, thus yielding lower variability overall.
  • 18. Accrual bond A bond on which interest accrues, but is not paid to the investor during the time of accrual. The amount of accrued interest is added to the remaining principal of the bond and is paid at maturity.
  • 19. Call price bond The stated price at which a bond may be repurchased, by use of a call feature, prior to maturity.
  • 20. Debenture bond â€ĸ An unsecured bond whose holder has the claim of a general creditor on all assets of the issuer not pledged specifically to secure other debt. Compare subordinated debenture bond, and collateral trust bonds.
  • 21. Discount bond â€ĸ Debt sold for less than its principal value. If a discount bond pays no interest, it is called a zero coupon bond. ī‚´ A bond selling below par. ī‚´ A bond that is valued at less than its face amount.
  • 22. Face value bond â€ĸ The value that appears on the face of a bond that indicates the bond s value at its maturity date.
  • 23. Global bonds â€ĸ Bonds that are designed so as to qualify for immediate trading in any domestic capital market and in the Euromarkets