International Bond Market
(A Study on Citi Bank)
Citi, the leading global bank, has approximately 200
million customer accounts and does business in
more than 160 countries and jurisdictions. Citi
provides consumers, corporations, governments and
institutions with a broad range of financial products
and services, including consumer banking and
credit, corporate and investment banking, securities
Citi Branded Credit Cards
Citi Retail Services
Citi Commercial Bank
Securities & Banking
Corporate & Investment Banking
Citi Private Bank
Citi Treasury & Trade solution
Citi Securities and Fund services
WHAT IS BOND MARKET ?
The bond market is a financial market where participants buy
and sell debt securities , usually in the form of bonds.
The bond market primarily includes:I) Government-issued securities.
II) Corporate debt securities.
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
INTERNATIONAL BOND IS FURTHER CLASSIFIED IN
It is a debt market
It is a fund raising market
Fixed income instrument
Issued in foreign currency
It channelizing savings
Step 1:-A borrower will contact an investment
Step 2:- The lead manager will invite other banks.
Step 3:-The managing group and banks will serve as
underwriters for the
Step 4:-The various members of the underwriting
syndicate receive a
portion of the spread.
Step 5:-The lead manager receives the full spread.
Straight Fixed-rate with equity warrants
Zero coupon bond
Diversify your portfolio
International fund raising instrument
Outperformed by Mutual Funds
Fixed income market
Investment avenue(short term as well
as long term)
International and emerging-market bonds
U.S. Treasuries are considered among the safest investments
because they are backed by the "full faith and credit" of the
U.S. government. While the regular interest payments from
Treasuries are considered quite secure, the value of these
bonds can fall sharply when interest rates rise. The bonds also
carry inflation risk. We could lose money in inflation-adjusted
terms if, say, consumer-price increases outpace the interest
rate on your bonds.
Comes in Three Versions :
which mature in 90 days to one year
which mature in two to ten years
which have maturities of up to 30 years
Corporate securities can offer higher yields, but they are
also among the riskiest bonds, because they are backed
only by a company's promise to pay. Interest on
corporate bonds is fully taxable.
Corporate bonds are generally categorized into two
Investment-grade bonds have ratings of Baa and above from
Moody's Investors Service and BBB and above from Standard &
High-yield bonds are considered to have a greater risk of default
than their investment-grade counterparts. Indeed, they are often
called "junk bonds."
Municipal bonds, or "munis," generally have lower yields than other bonds.
But they are still a popular investment, especially with high-income
Munis pay interest that is potentially exempt from federal, state and local income
Munis are exempt from state taxes if you own securities issued from within your
state of residence.
Local tax exemption applies if you hold securities issued from within your city of
That municipal-bond interest can be subject to the Alternative Minimum Tax
classified into two groups General obligation
General obligation bonds are backed by the taxing authority of the
state or municipality
Revenue bonds are issued by an agency, commission or authority
Mortgage securities are backed
by an underlying bundle of
carry a number of risks
homeowners generally refinance
when interest rates are low,
investors will have to reinvest at
those lower rates. This is known
as prepayment risk
Investors also face other risks,
notably the risk that some
homeowners may default on their
mortgage payments. This can
translate into a loss of money for
International bonds, including emergingmarket debt, are issued by non-U.S.
governments and corporations
International bonds carry many of the same
risks as U.S. bonds, including interest rate
risk, inflation risk and default risk
Investors have to contend with another
important risk: currency risk
International bonds can also be buffeted by
political, economic and social turmoil in the