This document provides an overview of various types of international financial market instruments. It discusses foreign bonds, eurobonds, global bonds, straight bonds, floating rate notes, convertible bonds, cocktail bonds, euro notes, euro commercial paper, medium term euro notes, American depository receipts (ADRs), global depository receipts (GDRs), and the procedures and documentation involved in their issuance. The key instruments covered include bonds, notes, and receipts issued internationally across currencies and jurisdictions.

1. INTERNATIONAL
FINANCIAL MARKET
INSTRUMENTS
Presented by:-
NILESH SEN
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2. Types
International bonds
 Foreign bonds & euro bonds
 Global bonds
 Straight bonds
 Floating rate notes
 Convertible bonds
 Cocktail bonds
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3. Types
Short & medium term instruments
 Euro notes
 Euro commercial paper
 Medium term euro notes
 OTHERS
 ADR
 GDR
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4. 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.
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5. DIFFERENCES
 If an Indian company
issue bond in the New-
York and bond is
dominated in US
dollar, such Bonds are
called foreign bonds.
 Foreign bonds
underwritten by the
underwriters of the
country where they
issued.
 But in case of euro
bonds they are
dominated in currency
other than the currency
of the country where the
bonds are issued.
 Euro bonds
underwritten by the
underwriters of multi
nationality
Foreign Bond Euro Bond
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6. DIFFERENCES
 Foreign bonds
subjected to
governmental rules
and regulations
 Foreign bonds is
determined keeping in
mind the investors of a
particular country.
 Euro bonds are free
from rules and
regulations.
 Euro bond are
tailored to the needs of
the multinational
investors.
Foreign Bond Euro Bond
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7. Global bonds
 First it issued in 1989 by world bank
 It also issued by the company
 It dominated in 7 country’s currency
 Australian dollar
 Canadian dollar
 Japanese yen
 Swidish crona
 Euro
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8. Global bonds
 Bonds that can be offered within the euro market
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.
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9. 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
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10. Straight bonds
 Interest rate is fixed known as coupon rate
 It is a traditional type of bond
Its varities:-
 -Bullet-redemption bond
 -Rising-coupon bond
 -Zero-coupon bond
 -Currency options
 -Bull and bear bonds.
 -Debt warrant bonds
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11. 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
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12. Convertible bonds
 Convertible into equity shares
 Some convertible bonds have detachable warrants
involving acquisition rights
 Automatic convertibility into a specified number of
shares.
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13. Cocktail 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.
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14. 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.
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15. Euro commercial notes
 A short-term, debt instrument
 Corporations issue euro commercial papers in
order to tap into the international money markets
for their financing.
 An example of a euro commercial paper is a British
firm issuing debt in U.S. dollars to encourage
investment from dollar-investors in international
money markets.
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16. 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
underwriting.
 It carry fixed interest rate
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17. ADR’S
 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
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18. GDR’S
 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 related
shares.
 Very similar to GDR's are ADR's.
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19. 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
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20. 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.
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