An example of foreign bonds is when a British Company in Switzerland issues bonds in
Swiss francs on the Swiss market. Bonds will be quoted and sold on the Swiss market.
Foreign bond markets developed first in the USA, followed by Switzerland, Japan and
other countries.
Foreign bonds issued on American markets are called “Yankee” bond, while those
issued on Japanese markets are called “Samurai” bonds.
The situation of external bond markets reflects the trend pertaining to the supply of
resources and the demand for credits in the market. Besides, it is indicative of
international economic and financial factors; it also reflects the condition of national
markets as well as of interest rates.
There has been a steady increase in the business of external bond market. For instance,
Euro-bonds issues were worth $ 258 billion in 1991, this rose to $ 368 billion by 1994.
Similarly, the respective figures for foreign bonds were $ 50.6 billion in 1991 and $ 60
billion in 1994.
The US dollar remains by far the most used currency for Euro-bond or foreign bond
issues.
- Euro-bond Market
As already indicated, Euro-bonds are the bonds issued in Euro-currencies and placed
simultaneously and in similar conditions in several countries through an international
bank syndicate or consortium.
These bonds represent a loan of medium- or long-term, from 5 to 15 years, and generally
carry an interest. The lender is non-resident.
- Participants in Euro-bond Market
The major participants are enterprises and financial institutions as well as investing
agencies.
Principal borrowers. In the order of importance, they are as follows:
- Private enterprisers, for example, in France, some of them are Pechiney, Renault,
Rhone Poulenc, etc. - Public enterprises;
- Financial institutions;
- Governments and Central Banks;