EURO BOND MARKET

Direct transaction between borrowers and lenders without intermediation of a bank Euro bond issued in one country currencies for sale in many capital markets with the help of the bank Borrowers includes public sector organization, commercial banks and established organization

FEATURES OF EURO BOND MARKET

Euro bond market is an off shore operation, which is not control by the any country Eurobonds are not costly and time consuming procedures Eurobond facilitates negotiation in the secondary market Eurobonds offer investors, exemption from tax-withholding provisions applicable to domestic and foreign bonds

 Eurobonds tax paid deduction is made before interest is paid

KINDS OF EUROBOND MARKET

STRAIGHT Eurobond Market
Fixed maturity Fixed rate of interest Paid lump sum at the maturity date Unsecured bonds Lenders considered ability of the borrowers assets

Convertible euro bond

Bonds are convertible into parent common stock Provides a steady income to the investors Inflation-conscious investors prefers more

BOND WITH WARRANTS

o Eurobonds issued with warrants o Warrant is an option to buy a stated number of common shares at a stated price during a prescribed period. o Warrants pay no dividends o Warrants have no voting rights o These are worthless if expiration price raises

Currency Option Bond

The bond holder receive the interest payment and the principle in any of the currencies specified in the bond Bond holder can choose of their currency and coupon and principle These option should choose within the predetermined exchange rate

Currency Basket bonds

It come for stabilize the purchasing power of the coupon This is combining by various currencies They follow weighting process They consider average currencies

YANKEE BONDS
These bonds are a dollar bond issued in U.S. These are done by non U.S. borrowers

Samurai bonds
These are issued by Japan These are based on Yen denominated bond

Floating rate bond

The interest of the bonds are varies for every six months at regular basis Reflect changes in short-term market rates

Stripped bonds
U.S. Govt issued for foreign investors Treasury regulations gives authority to sell for the foreign investors Resale the bonds with bearer form

Procedure of Euro Bond Issues

The borrower will appoint a bank to manage the bond issue The managing banks invites one or more other banks or financial institutions to co-manage the issue Inviting a group of banks for underwriting Underwriting bonds issues will try to solve the problems

 Selling banks should be able to place the bonds with buyers Eurobond issues in the UK are usually constituted under the a trust deed The bank which is responsible for making payments to the bondholders will act as their trustee