Choice of currency in bond issuance and the international role of currencies
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.Download Info
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Paper provided by European Central Bank in its series Working Paper Series with number 814.Length: 40 pages
Date of creation: Sep 2007
Date of revision:
Handle: RePEc:ecb:ecbwps:20070814
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Related research
Keywords: Bond issuance; Foreign currency denominated debt; Panel logit; nested logit; conditional logit.;Find related papers by JEL classification:
- C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-10-06 (All new papers)
- NEP-DCM-2007-10-06 (Discrete Choice Models)
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- 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.
- Paul Mizen & Frank Packer & Eli M Remolona & Serafeim Tsoukas, 2012. "Why do firms issue abroad? Lessons from onshore and offshore corporate bond finance in Asian emerging markets," BIS Working Papers 401, Bank for International Settlements.
- Christian Thimann, 2009.
"Global roles of currencies,"
Working Paper Series
1031, European Central Bank.
- Christian Thimann, 2008. "Global Roles of Currencies," International Finance, Wiley Blackwell, vol. 11(3), pages 211-245, December.
- Susan Black & Anella Munro, 2010. "Why issue bonds offshore?," BIS Working Papers 334, Bank for International Settlements.
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