international bond financing

International bond financing is an international financing method that has developed extremely rapidly in the past 20 years. Since the 1980s, the proportion of long-term international bond financing in the international capital market has significantly exceeded that of international loan financing. Financial innovations associated with it have also emerged one after another, becoming an important symbol of securitization in the international capital market.

Section 1 International Bonds and International Bond Market

1. The Concept and Characteristics of International Bonds

International bonds refer to freely tradable debt securities issued by a country's government agencies, financial institutions or industrial and commercial enterprises to foreign investors to raise funds.

There are three basic characteristics of international bonds: (1) The issuers and investors of international bonds belong to different countries or regions, and their issuance, trading and debt repayment are subject to Governed by the laws of different countries, this is different from domestic bonds; (2) International bonds are essentially a credit certificate, which reflects the creditor-debt relationship between the bond issuer and the bond holder, which is different from international equity securities; ( 3) International bonds are securitized, freely tradable debt certificates, and their issuance and trading are governed by the securities laws and regulations of the relevant countries, which are different from international loan debt documents. In addition, a typical international bond usually has the characteristics of a bearer security, a fixed maturity date, and a fixed interest rate.

International bonds can be divided into two categories: foreign bonds (ForeignBond) and European bonds (Eurobond). Foreign bonds refer to international bonds issued by the bond issuer in a foreign market in that country's currency and traded in that country's securities market. For example, the government bonds issued by the Ministry of Finance of China in Germany and listed on the Frankfurt Stock Exchange, the "Samurai Bonds" issued by the Bank of China in Japan and listed on the Tokyo Stock Exchange, and the "Yankee Bonds" issued by the Bank of China in the United States are all Such. Eurobonds refer to international bonds issued by the bond issuer in an international currency other than the currency of the bond's face value (usually sold in several countries at the same time). It is actually a stateless bond. According to the currency of the face value of European bonds, they can be further divided into Eurodollar bonds, European pound bonds, Asian dollar bonds, Asian pound bonds, etc. For example, the US dollar bonds issued by the Bank of China in the international market and listed in Tokyo and the US dollar bonds listed in London belong to this category.

In addition to differences in issuance markets, foreign bonds and EuropeanBonds also have the following basic differences: (1) In terms of bond underwriting, foreign bonds are usually underwritten by financial companies, securities companies or investment banks in the country where the bonds are issued; European bonds are usually underwritten by international financial companies, securities companies or investment banks Organize distributors from different countries (usually the place where the bond is issued) to jointly underwrite, which is the so-called "global offering". (2) In terms of the face value currency of the bond, the currency used for foreign bonds is limited to the currency of the country where the bond market is located; while in Europe The issuer of the bond can choose a major currency to indicate the face value of the bond based on the currency's exchange rate, interest rate and fund-raising purpose. (3) In terms of applicable law, the issuance of foreign bonds must be governed by the laws of the country where it is issued, and often must fulfill Specific application and registration procedures, it is legally regarded as a certain foreign security; and the issuance of Eurobonds is generally not controlled by the laws of the country where the bonds are issued (but subject to the laws of the country where the bonds are listed), and usually does not require filing The country of issuance performs the application and registration procedures, and its legal application issues usually must be determined in the bond issuance documents. (4) In terms of issuance tax, the issuer of foreign bonds must in principle accept the withholding of securities issuance tax in accordance with the laws of the country where the market is located ( However, many countries and regions grant tax exemptions); issuers of Eurobonds usually do not need to pay securities issuance tax. Since Eurobonds can be retained abroad, transaction income tax on such bonds is not levied, which is also a problem for investors. Quite attractive. It is worth noting that due to the existence of securities trading markets and the international development of securities markets in various countries, the differences between foreign bonds and European bonds will tend to weaken after entering the secondary market.