GLOBAL BOND MARKET

GROUP MEMBERS:

•Priyanka Limbachiya 512

•Richa Modi 517

•Anjal Surana 536

•Priyanka Tiwari 537

•Aditi Warang 547

INTRODUCTION

Global Bond is the one which is issued simultaneously in several bond

markets throughout the world. Issue of global bond normally have high credit

standing, reputation in the market. They also require the fund in a large

quantity on a regular basis.

When company is issuing bond in a multiple bond market throughout the

world same price is offered. After issue of a bond the trading & settlement on

a regular basis is done domestically.

CONT.

Bond Market in the world are classified as per the trading blocks:

i. A Dollar block which includes United States, Canada, Australia, New

Zealand.

ii. European Block consist of two groups:

a) Euro Zone block having a common currency Euro which includes Germany,

France, Italy, Spain, Belgium, Holland, Greece, etc.

b) Non-Euro Zone block includes Norway, Denmark & Sweden.

c) United Kingdom trades independently in the bond market. This trading blocks

provides a benchmark for market to influence price in the other market.

FEATURES OF INTERNATIONAL BOND

1) It is a debt market

2) It is a fund raising market

3) Fixed income instrument

4) Issued in foreign currency

5) It channelizing savings

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ADVANTAGES & DISADVANTAGES OF GLOBAL BOND ADVANTAGES

Diversify your portfolio

International fund raising

instrument

Fixed income market

Investment avenue(short term as

well as long term)

DISADVANTAGES Outperformed by Mutual Funds

Fees

Risk

Limited Selection

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CLASSIFICATION OF GLOBAL BOND MARKETIt is divided into two markets i.e. Internal Market & External Market.

Internal Market is also called National Bond Market which is again divided into

two parts:

• Domestic National Market:

In this market issuers are domicile in the country where bonds are issued and

subsequently traded.

• Issued locally by a domestic borrower and are usually denominated in the

local currency

• Usually make up the bulk of the national bond market

• Issuers include government, semi-government and corporate agencies

CONT.• Foreign National Market:

• In this market issuers of bonds are not domicile in the country of issue &

trade. Issued on a local market by a foreign borrower and are usually

denominated in the local currency.

• Foreign bond issues and trading are under the supervision of local market

authorities.

• Foreign bonds include:

• Yankee bonds (in the U.S)

• Rembrandt bonds (in the Netherlands)

• Samurai bonds (in Japan)

• Matador bonds (in Spain)

• Bulldog bonds (in the UK)

CONT.

External Bond Market is also called International Bond Market. Developed

in the 1960s and was early recognized as an efficient, low-cost and

innovative market. Avoids most national regulations and constraints and

provides sophisticated instruments. They have following features:

i. They are underwritten by international agency.

ii. They are offered simultaneously in different countries.

iii. They are also called off-shore bond market or euro bond market.

iv. This are not traded on a specific national market.

DISTINCTION

FOREIGN BOND MARKET

• Issuer-Any borrower with credit standing explicit rating rate

• Currency-Any widely used by international country

• Amount raised in single issue-Typically US $50-500 Millions

• Type-Bearer

• Interest payment-Annual for fixed rate bond and quarterly for FRN’s

• Listing-Usually London Luxembourg

• Investor-Wide international profile. Private individual play a major role

EURO BOND MARKET• Issuer-Foreign government

or corporation or international institution US-SEC-Register

• Currency-Local currency

• Amount raised in single issue-Typically US $50-500 Millions

• Type-Bearer expect , in Bulldog and Yankee markets

• Interest payment-As in corresponding domestic market

• Listing-Foreign stock exchange

• Investor-Domestic and overseas

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PARTICIPANTS OF GLOBAL BOND MARKET

There are several participants in the Global Bond Market:-

Issuer of a bond:

Issuers consist of Government authority, Private companies, PSU companies,

MNC’s banks, Financial institutions. They raise the funds normally for long

term. Many companies list their bonds on stock exchange to provide liquidity

in the market.

CONT. Underwriters:

Underwriters are also called Merchant Bankers in some cases. They help the

issuers to raise the money with a guarantee. They perform many activities on

behalf of issuers like preparing legal documents, prospectus, road shows, post

issue management, etc.

Investors:

Investors are of different types, they are basically divided into two types:-

a. Institutional Investor: It will consist of domestic & foreign institutional

investors. QIB’s can invest in both.

b. Non-Institutional Investor: It includes retail investors, high networth

individuals, employees of a company, etc.

Thank you