1. Overview of international bonds
International bonds are funds raised by a country’s government, financial institutions, industrial and commercial enterprises or national organizations. and financing, bonds issued in foreign financial markets with a face value in foreign currency.
An important feature of international bonds is that the issuers and investors belong to different countries, and the funds raised come from foreign financial markets.
The issuance and trading of international bonds can be used not only to balance the international balance of payments of the issuing country, but also to introduce funds for the issuing country's government or enterprises to engage in development and production.
International bonds can be divided into foreign bonds and European bonds depending on the currency used to issue the bonds and the place of issuance. [Edit this paragraph] Characteristics of international bonds International bonds are bonds issued cross-borderly, involving two or more countries. Compared with domestic bonds, they have certain particularities.
2. What are the characteristics of international bonds?
International bonds are bonds issued cross-border , involving two or more countries, has certain particularities compared with domestic bonds.
1. Wide sources of funds
International bonds are raised in the international securities market and are issued to: Investors from many countries, therefore, have a much wider source of funding than domestic bonds, and by issuing international bonds, the issuer can be flexibly and fully funded for its construction projects and other needs.
2. Large issuance scale
The scale of international bond issuance is generally large. This is because One of the purposes of borrowing this kind of debt is to take advantage of the breadth and sufficiency of funding sources in the international securities market. At the same time, since issuers entering the international bond market must have bond credit ratings assessed by international credit rating agencies, only issuers with high credibility can successfully raise funds. Therefore, when the issuer's credit status is fully affirmed, This was only possible with huge amounts of debt.
3. There is exchange rate risk
Issuance of domestic bonds, funds raised and repayment of principal and interest are all in domestic currency, so there is no exchange rate risk. When international bonds are issued, the funds raised are in foreign currencies. Once the exchange rate fluctuates, both the issuer and investors may suffer unexpected losses or gain unexpected gains. Therefore, an important part of the risk of international bonds is exchange rate risk.
4. Guaranteed by national sovereignty
When raising funds in the international bond market, you can sometimes get a The sovereign government's commitment to final payment is guaranteed. If such a commitment is guaranteed, various international bond markets will be willing to open to the sovereign country, which also makes the international bond market highly secure. Of course, governments representing national sovereignty must also inspect and control the borrowing of domestic issuers in the international bond market.
