The New Euromarkets: A Theoretical and Practical Study of International Financing in the Eurobond, Eurocurrency and Related Financial Markets

286 Pages·1975·25.688 MB·English

by  Brian Scott Quinn (auth.)

THE NEW EUROMARKETS
THE NEW
EUROMARKETS
of
A Theoretical and Practical Study International
Financing in the Eurobond, Eurocurrency and
Related Financial Markets
BRIAN SCOTT QUINN
Department of Economics
University of Reading
©Brian Scott Quinn 1975
Softcover reprint of the hardcover 1st edition 1975
All rights reserved. No part of this publication may be
reproduced or transmitted, in any form or by any means,
without permission
First edition 1975
Reprinted 1979
Published by
THE MACMILLAN PRESS LTD
London and Basingstoke
Associated companies in Delhi Dublin
Hong Kong Johannesburg Melbourne
New York Singapore Tokyo
ISBN 978-1-349-02605-0 ISBN 978-1-349-02603-6 (eBook)
DOI 10.1007/978-1-349-02603-6
This book is dedicated to
PAUL
(despite whom it was written!)
Contents
List of Figures ix
List of Tables xi
Preface xiii
Acknowledgements xxi
SECTION A-THE NEW EUROMARKETS IN
PERSPECTIVE
1 Introduction 3
2 Capital Flows 9
3 Foreign Bonds to Eurobonds 18
4 The Genesis of the Roll-over Credit 34
SECTION B - THE INSTITUTIONAL MECHANICS
OF THE EUROMARKETS
5 Eurobonds and Euroequities 47
6 The Eurobond Secondary Market and Clearing Systems 75
7 The Eurobond and Taxation 83
8 Eurocurrency Credits 89
SECTION C-EUROBOND CURRENCIES AND
INTEREST RATES
9 The Currency Choice and its Relation to the
Interest Rate 101
10 Currencies Used for Denomination 112
11 Multi-currency Options, Indexed Loans, European
Currency Unit, European Unit of Account, the Eurco 138
12 Interest Rate Levels and Differentials 151
viii Contents
SECTION D-BORROWERS IN mE
EUROMARKETS
13 Who Uses the Euromarkets and Why? 175
14 United Kingdom Financing in the Eurobond Market 183
15 Other Borrowers in the Eurobond Market 202
16 Financing in Eurocurrencies 223
The Euromarkets in Retrospect and Prospect 235
Appendix 1 249
Appendix 2 263
N()tes 265
Bibliography 269
Index 273
List of Figures
1 Comparison of current yields on US dollar eurobonds
and Deutschmark eurobonds 1968-73 XV1l
2 Yields on US corporate bonds on the US domestic and
eurobond markets 1966-70 163
3 US companies' borrowing rates in the US domestic and
eurobond markets 1971-3 163
4 Movement of interest rates and domestic sales of euro
DM bonds 166
5 DM domestic and DM eurobond corporate yields 1972--4 167
6 Weighted averages of yields on selected long-tenn
straight international bonds 1970-March 1974 169
7 Amount of devaluation of the dollar implied by the
dollar/DM yield differential 171
8 Bank lending rates (eurodollar/US domestic) 239
9 Six-month interbank interest rate fluctuation (actual and
moving average) 1967-73 242
List of Tables
1a International bond issues - eurobonds and foreign
bonds xiv
1b Medium-term eurocurrency credits xiv
2 Eurobond issues by currency xv
3 Eurobond issues by nationality of borrower or
guarantor xviii
4 Public issues of foreign bonds in various countries
1947-61 18
5 Foreign issues as per cent of total issues of fixed interest
securities for various countries 1960-5 19
6 Absolute amounts of foreign issues in various markets
1961-5 20
7 Cost of raising capital for corporate bonds and central
government bond yields in 1963 26
8 Savings and investment in various countries 26
9 Medium-term eurocredits by maturity 1973 43
10 Proportion of non-private sector eurobond issues
1963-71 47
11 Deutschmark eurobond and foreign bond issues 123
12 Commercial bank deposit rates in Germany during
1969 124
13 German and Japanese trade and current account
balances 133
14 Estimated initial sources of funds in the eurobond
market 1957-66 152
15 Eurobond issues by UK entities 183
16 UK comparative new issue volume statistics 197
17a US corporate international issues 1963-74 202
17 b US corporate international issues by type and currency 203
18 Eurobond issues by entities in European countries 209
19 Australian corporate borrowers in the eurobond
market 218
xii List of Tables
20 Eurobond issues by developing countries 221
21 Medium-tenn eurocredits by currency 1973 238
22a A comparison of three- and six-monthly LIBO rates
over a four-and-one-half-year period 240
22b A comparison of the cost of borrowing in the floating
rate market and the eurobond market 1967-73 241