Compare and contrast a Eurocurrency loan and a Eurobond- Week 4 DQ 3
Euro bonds are issued in both fixed rate and floating rate forms. Fixed rate bonds are an attractive exposure management tool since the known long-term currency inflows can be offset by the known long-term outflows in the same currency.
In contrast, Euro currency loans carry variable rates.
Euro bonds have longer maturities while the period of borrowing in the Euro currency market has tended to lengthen over time.
Earlier, the funds available for lending at any time have been much more in the inter-bank market than in the bond market. But of late, this situation does not hold true. Moreover, although in the past the flotation costs of a Euro currency loan...
Excerpt from file: CompareandcontrastaEurocurrencyloananda EurobondWeek4DQ3 1.Costofborrowing Eurobondsareissuedinbothfixedrateandfloatingrateforms.Fixed ratebondsareanattractiveexposuremanagementtoolsincethe knownlongtermcurrencyinflowscanbeoffsetbytheknownlong termoutflowsinthesamecurrency.
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