Characteristics of international bonds

International bonds are bonds issued cross-borderly, involving two or more countries. Compared with domestic bonds, they have certain particularities.

1. Wide sources of funds

International bonds are raised in the international securities market and are issued to: Investors from many countries, therefore, have a much wider source of funding than domestic bonds, and by issuing international bonds, the issuer can be flexibly and fully funded for its construction projects and other needs.

2. Large issuance scale

The scale of international bond issuance is generally large. This is because One of the purposes of borrowing this kind of debt is to take advantage of the breadth and sufficiency of funding sources in the international securities market. At the same time, since issuers entering the international bond market must have bond credit ratings assessed by international credit rating agencies, only issuers with high credibility can successfully raise funds. Therefore, when the issuer's credit status is fully affirmed, This was only possible with huge amounts of debt.

3. There is exchange rate risk

Issuing domestic bonds requires raising and repaying principal and interest. It is the domestic currency, so there is no exchange rate risk. When international bonds are issued, the funds raised are in foreign currencies. Once the exchange rate fluctuates, both the issuer and investors may suffer unexpected losses or gain unexpected gains. Therefore, an important part of the risk of international bonds is exchange rate risk.

4. Guaranteed by national sovereignty

When raising funds in the international bond market, you can sometimes get a The sovereign government's commitment to final payment is guaranteed. If such a commitment is guaranteed, various international bond markets will be willing to open to the sovereign country, which also makes the international bond market highly secure. Of course, governments representing national sovereignty must also inspect and control the borrowing of domestic issuers in the international bond market.

5. Use freely convertible currency as the measurement currency

International bonds are issued in the international market, so The denomination currency is often an international common currency, with one share in US dollars, pounds, ** marks, and yen.and Swiss francs, so that the funds raised by the issuer are free foreign exchange funds that can be used universally.