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Choice of currency in bond issuance and the international role of currencies

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Author Info

  • Siegfried, Nikolaus
  • Simeonova, Emilia
  • Vespro, Cristina

Abstract

This paper investigates bond issuance of non-financial corporations in advanced economies during the period 1999-2003, attempting to understand motives for issuing in foreign currency, and determinants for the choice of currency. We consider the following influences on the currency choice when issuing foreign currency denominated debt: the microeconomic characteristics of the firm, the macroeconomic institutional environment and the financial particularities of the bond issue. We find that in addition to cost minimisation, hedging motives and the desire to establish an investor base influences the choice of currency. At the same time, market conventions and regulation also affect the choice. JEL Classification: C25, E44, F23, G32

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Bibliographic Info

Paper provided by European Central Bank in its series Working Paper Series with number 0814.

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Date of creation: Sep 2007
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Handle: RePEc:ecb:ecbwps:20070814

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Related research

Keywords: Bond issuance; conditional logit; Foreign currency denominated debt; nested logit; Panel logit;

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Cited by:
  1. Paul Mizen & Frank Packer & Eli Remolona & Serafeim Tsoukas, 2012. "Why do firms issue abroad? Lessons from onshore and offshore corporate bond finance in Asian emerging markets," Working Papers 2012_16, Business School - Economics, University of Glasgow.
  2. Christian Thimann, 2008. "Global Roles of Currencies," International Finance, Wiley Blackwell, vol. 11(3), pages 211-245, December.
  3. Susan Black & Anella Munro, 2010. "Why issue bonds offshore?," BIS Papers chapters, in: Bank for International Settlements (ed.), The international financial crisis and policy challenges in Asia and the Pacific, volume 52, pages 97-144 Bank for International Settlements.
  4. Massa, Massimo & ┼Żaldokas, Alminas, 2014. "Investor base and corporate borrowing: Evidence from international bonds," Journal of International Economics, Elsevier, vol. 92(1), pages 95-110.

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