The document discusses international financial market instruments and international financial institutions. It describes various types of international bonds such as foreign bonds, eurobonds, global bonds, and floating rate notes. It also discusses short and medium term instruments like euro notes, euro commercial paper, and medium term euro notes. The document then provides details on international financial institutions like the World Bank Group, International Monetary Fund, and regional development banks; and describes their common goal of reducing poverty and supporting sustainable development.

1. INTERNATIONAL FINANCIAL
MARKET INSTRUMENTS &
INTERNATIONAL FINANCIAL INSTITUTIONS
Presented by:-
VINEETHA
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2. International financial market
instruments
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

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 verities:-
 -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(American Depository Receipts)
 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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21. INTERNATIONAL FINANCIAL INSTITUTIONS:
International financial institutions (IFIs)
are financial institutions that have been established
by more than one country, and hence are subjects
of international laws. Their owners or shareholders
are generally national governments, although other
international institutions and other organizations
occasionally figure as shareholders. The most
prominent IFIs are creations of multiple nations,
although some bilateral financial institutions exist
and are technically IFIs. Many of these are
multilateral development banks (MDB).

22. WHAT ARE INTERNATIONAL FINANCIAL
INSTITUTIONS (IFI’S)?
World Bank Group (WBG):
 International Bank for Reconstruction and Development (IBRD)
 International Development Association (IDA)
 International Finance Corporation (IFC)
 Multilateral Investment Guarantee Agency (MIGA)
 International Centre for Settlement of Investment Disputes
(ICSID)
International Monetary Fund (IMF)
Regional development banks, such as:
 African Development Bank (AFDB)
 Asian Development Bank (ADB)

23. CONTINUED…..
 Inter-American Development Bank (IADB)
 Bank of the South
 European Bank for Reconstruction and Development (EBRD)
Other regional financial institutions e.g. European
Investment Bank (EIB)
Export Credit Agencies of individual country governments,
such as:
 US Export Import Bank (EXIM)
 Japan External Trade Organization
 Hermes Kreditversicherungs (Germany)

24. INTERNATIONAL FINANCIAL INSTITUTIONS:
Their common goal…….
 To reduce global poverty and improve people's living conditions
and standards;
 To support sustainable economic, social and institutional
development; and
 To promote regional cooperation and integration.

25. WORLD BANK GROUP:
The term "World Bank" generally refers to
just the IBRD and IDA
The World Bank's activities are focused
on developing countries, in fields such as
human development, agriculture and rural
development, environmental protection,
infrastructure, and governance.
It is concerned with assisting its
member countries to achieve sustained
economic growth. It functions as an
intermediary for the transfer of
financial resources from the more
developed to the less developed
countries.
World Bank
Formation- 27 December 1945
Type- International organization
Legal status- Treaty
Purpose/focus- Economic
development,
poverty elimination
Membership- 187 countries
President- Robert Zoellick
Jim Yong Kim (Elect)
Main organ- Board of
Directors

26. INTERNATIONAL BANK FOR RECONSTRUCTION AND
DEVELOPMET (IBRD):
1.The International Bank for
Reconstruction and Development was
established in 1945.
2. It had 184 members.
3. The IBRD is an international
organization whose original mission
was to finance the reconstruction of
nations devastated by World War II.
4. Now, its mission has expanded to fight
poverty by means of financing states.
5. Cumulative lending: $394 billion
6. Fiscal 2004 lending: $11 billion for 87
new operations in 33 countries

27. INTERNATIONAL DEVELOPMENT ASSOCIATION (IDA):
1.The International Development
Association was established in
September 24, 1960.
2. 165 Members is the part of the
World Bank that helps the world’s
poorest countries.
3. IDA is responsible for providing
long-term, interest-free loans to the
world's 80 poorest countries, 39 of
which are in Africa.
4. Fiscal 2004 commitments: $9
billion for 158 new operations in 62
countries

28. MULTILATERAL INVESTMENT AND GUARENTEE
AGENCY (MIGA):
1. The Multilateral Investment
Guarantee Agency was
established in 1988.
2. It had165 members.
3. Cumulative guarantees
issued: $13.5 billion
(Amounts include funds
leveraged through the
Cooperative Underwriting
Program).
4. Fiscal 2004 guarantees
issued: $1.1 billion

29. INTERNATIONAL FINANCE CORPORATION
(IFC):
1. The International Finance Corporation
was established in 1956.
2. It had 176 members.
3. Committed portfolio: $23.5 billion
(includes $5.5 billion in syndicated
loans).
4. It promotes sustainable private sector
investment in developing countries as
a way to reduce poverty and improve
people's lives.
5. Fiscal 2004 commitments: $4.8 billion
for 217 projects in 65 countries.

30. INTERNATIONAL CENTRE FOR THE SETTLEMENT OF INVESTMENT DISPUTES (ICSID):
1. The International Centre for
Settlement of Investment
Disputes was established in
1966.
2. It had 143 members.
3. Total cases registered: 159
4. It provides facilities for the
conciliation and arbitration of
investment disputes between
member countries and
individual investors.
5. Fiscal 2004 cases
registered: 30

31. INTERNATIONAL MONETARY FUND (IMF):
The International Monetary Fund was created in 1944, with a goal
to stabilize exchange rates and supervise the reconstruction of the
world’s international payment system.
1- Promote international monetary cooperation.
2-Shorten the duration and lessen the degree of disequilibrium in
the international balances of payments of members.
3-Facilitate the expansion and balanced growth of international
trade.
4-Promote Exchange stability and maintain orderly exchange
arrangements among members.
5-Assist in establishing a multilateral system of payments.

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