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

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Author Info
Nikolaus Siegfried () (Thames River Capital LLP, 51 Berkeley Square, London W1J 5BB, United Kingdom.)
Emilia Simeonova () (Columbia University, 2960 Broadway, New York, NY 10027-6902, USA.)
Cristina Vespro () (ISS Governance Services - RiskMetrics Group, Chaussée de la Hulpe 181, B-1170, Brussels, Belgium.)

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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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Paper provided by European Central Bank in its series Working Paper Series with number 814.

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Length: 40 pages
Date of creation: Sep 2007
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Handle: RePEc:ecb:ecbwps:20070814

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

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    Other versions:
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Christian Thimann, 2009. "Global roles of currencies," Working Paper Series 1031, European Central Bank. [Downloadable!]
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