Global Investing: Eurobonds and Alternatives

373 Pages·1991·19.938 MB·English

by  Julian Walmsley (auth.)

GLOBAL INVESTING
Also by Julian Walmsley
*THE MACMILLAN DICTIONARY OF INTERNATIONAL FINANCE
THE FOREIGN EXCHANGE HANDBOOK
NEW FINANCIAL INSTRUMENTS
*Also published by Palgrave Macmillan
Global Investing
Eurobonds and Alternatives
Julian Walmsley
M
MACMILLAN
©Julian Walmsley 1991
Softcover reprint of the hardcover 1st edition 1991 978-0-333-51023-0
All rights reserved. No reproduction, copy or transmission
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First published 1991
Published by
MACMILLAN PRESS LTD
Houndmills, Basingstoke, Hampshire RG21 2XS
and London
Companies and representatives
throughout the world
Typeset by Footnote Graphics,
Warminster, Wiltshire
British Library Cataloguing in Publication Data
Walmsley, Julian
Global investing: Eurobonds and alternatives.
I. International money markets
I. Title
332.4'5
ISBN 978-1-349-11102-2 ISBN 978-1-349-11100-8 (eBook)
DOI10.1007/978-1-349-11100-8
To Jane
Contents
List of Acronyms ix
Preface
XV
Part One: Background
1 The Global Spectrum 3
2 Early Years: 1963-1979 18
3 The Coming Together of the Markets: 1979-1989 30
Part Two: Global Asset Choices
4 Table d'Hote: The Basic International Menu 45
5 Ala Carte 1: Asset-Backed Securities and Zero Coupons 64
6 Ala Carte 2: Synthetics, Warrant-Linked and Other Exotica 75
7 Derivatives: Futures, Options and Swaps 90
8 Foreign Exchange and the Global Investor 114
Part Three: Eurobonds and Related Markets
9 The Eurobond Primary Market 129
10 The Secondary Market 153
11 Issuers, Intermediaries and Investors 162
12 Equity-Linked Bonds and the Euroequity Market 175
13 The Eurocurrency Market 182
Part Four: Major National Markets
14 Money Market Paper 195
15 Major Bond Markets 205
16 Major Equity Markets 223
Part Five: Making the Global System a Reality
17 Clearing and Settlement Systems 267
18 Regulation and the Future of the System 284
VII
Appendices
1 Major Bond Markets 297
2 Bond Market Calculations 304
3 FRN Calculations and Valuation Formulas 320
4 Convertible and Warrant Calculations 324
5 Swap Calculations 328
6 International Bond and Equity Portfolio Measurement Issues 332
Index 365
List of Acronyms
International finance has unfortunately spawned a bewildering array of
acronyms. I have tried to keep them to a minimum but they are something
of a necessary evil in this field. The following is a list of most of the
acronyms used in the book.
Al Top rating for commercial paper by Standard & Poor's
AAA Top rating for bonds by Standard & Poor's
ACE Joint trade matching system set up by Cede! and Euroclear
ADR American Depositary Receipt
AFBD Association of Futures Brokers and Dealers (of the UK)
AIBD Association of International Bond Dealers
AIM Amsterdam Interprofessional Market (Dutch OTC bond
market)
AKV Auslandskassenverein (German securities depository)
AMBAC American Bond Assurance Corporation
APT Automated Pit Trading (screen-based futures trading on
LIFFE)
ASX Australian Stock Exchange
BBB Lowest Standard & Poor's rating that is 'investment
grade'. Below BBB are 'junk bonds'.
BIG Salomon Brothers Broad Investment Grade bond index
BPC Bearer Participation Certificate
BTAN Bons du Tresor a Taux Fixe et Interet Annuel (French
government bonds of under 5 years maturity)
CAC Compagnie des Agents de Change (French equity index:
CAC-40)
CATS Certificates of Accrual on Treasury securities (US zero
coupon bonds)
CATS Computer Assisted Trading System (used in Toronto,
Brussels and Madrid)
CBOE Chicago Board Options Exchange
CBOT Chicago Board of Trade (futures exchange)
CD Certificate of Deposit
CDS Canadian Depository for Securities Ltd
CEDEL Centrale de Livraison de Valeurs Mobilieres (Eurobond
clearing centre based in Luxembourg)
CFTC Commodity Futures Trading Commission (of the USA)
CI Certificat d'investissement
CME Chicago Mercantile Exchange
CMO Collateralized Mortgage Obligation
ix
List of Acronyms
X
COB Commission des Operations de Bourse (French stock
market regulator)
COP Continuously Offered Payment rights (issued by World
Bank in Switzerland)
COLTS Continuously Offered Long Term Securities (issued by
World Bank in Eurobond market and US)
CONSOB Commissione Nazionale perle Societa e la Borsa (Italian
stock market regulator)
CORES Computer-assisted Order Routing and Execution System
(used on Tokyo Stock Exchange)
CUBES Coupons Under Book-Entry Safekeeping (US system for
trading stripped bond coupons)
DAX Deutsche Aktienindex- German 'real-time' equity index
DOT Designated Order Turnaround system (used on New York
Stock Exchange)
DTB Deutsche Termin Borse (German futures exchange)
DTC Depository Trust Company (of New York)
EC European Community
ECGD Export Credit Guarantee Department (UK)
ECP Euro-commercial Paper
ECU European Currency Unit
EEC European Economic Community
EMS European Monetary System
EUCLID Euroclear Computer Link to its members
FAZ Frankfurter Allgemeine Zeitung (German equity index)
FEL IN Fonds d'Etat Liberes d'Interet Nominal (French
government zero coupon bonds)
FFCB Federal Farm Credit Bank (of the US)
FGIC Financial Guaranty Insurance Corporation (US bond
insurer)
FHLB Federal Home Loan Board (of the US)
FHLMC Federal Home Loan Mortgage Corporation (US housing
agency)
FICO Financing Corporation (US agency rescuing thrifts)
FIMBRA Financial Intermediaries, Managers and Brokers
Regulatory Association (of the UK)
FNMA Federal National Mortgage Association (US housing
agency)
FRCMO Floating Rate Collateralized Mortgage Obligation
FRN Floating Rate Note
FSA Financial Security Assurance (US bond insurer)
FTA-GS Financial Times/Institute of Actuaries/Goldman Sachs
international equity indices
FTSE Financial Times-Stock Exchange index of 100 shares