NAME Bhavik Parmar Sonu Pethani Harsh Sanghavi Shashank Pai

ROLL NO. 28 32 34 26

Vaishali Rawal
Dharmik Patel

36
30
3

WHAT IS BOND MARKET ?

The bond market is a financial market where participants buy and sell debt securities , usually in the form of bonds. The bond market primarily includes:I) Government-issued securities.

II) Corporate debt securities.

MEANING OF 'INTERNATIONAL BOND'

A bond issued in a country or currency other than that of the investor or broker. They include Eurobonds, which are issued in a foreign currency, foreign bonds, which are issued by a foreign government or corporation in the domestic market, and global bonds, which are issued in both domestic and international markets.

INTERNATIONAL BOND IS FURTHER CLASSIFIED IN THREE TYPES

1) 2) Domestic Bond Euro Bond

3)

Foreign Bond

FEATURES OF INTERNATIONAL BOND

1) It is a debt market

2) It is a fund raising market

3)

Fixed income instrument

4) Issued in foreign currency

5) It channelizing savings

THE COMMON PROCESS OF ISSUING BOND

Step 1:-A borrower will contact an investment banker.

Step 2:- The lead manager will invite other banks.

Step 3:-The managing group and banks will serve as underwriters for the underwriter issues.

Step 4:-The various members of the underwriting syndicate receive a portion of the spread.

Step 5:-The lead manager receives the full spread.

INSTRUMENTS OF INTERNATIONAL BOND MARKET

1) Straight Fixed-Rate

2) Floating-Rate Note

3)

Convertible Bond

4) Straight Fixed-rate with equity warrants

5) Zero coupon bond

6) Dual-Currency bond

RISK OF INVESTING IN BOND

1) 2) 3) Inflation Risk Interest Rate Risk Default Risk

4)
5) 6) 7)

Downgrade Risk
Liquidity Risk Reinvestment Risk Rip-off Risk

ADVANTAGES & DISADVANTAGES OF INTERNATIONAL BOND

Advantages Disadvantages

Diversify your portfolio

Outperformed by Mutual Funds Fees Risk Limited Selection

International fund raising instrument

Fixed income market Investment avenue(short term as well as long term)

CHARACTERISTICS OF INTERNATIONAL BOND MARKET INSTRUMENTS

Instruments
Straight Fixed-Rate
Floating-Rate Note Convertible Bond

Frequency of Interest payment

Annual
Quarterly or Semiannual Annual

Size of Interest payment

Fixed
Variable Fixed

Pay off at Maturity

Currency of issue
Currency of issue Currency of issue or conversion to equity share Currency of issue plus equity shares from exercised warrants Currency of issue Dual currency
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Straight Fixed-rate with equity warrants

Annual

Fixed

Zero coupon bond Dual-Currency bond

None Annual

Zero Fixed

INTERNATIONAL BOND AMOUNTS OUTSTANDING BY MAJOR INSTRUMENTS

INSTRUMENTS
Straight fixed-rate Floating-rate note Straight fixed-rate with equity warrants

Dec. 2008
14428.4 7892.0 396.7

Dec. 2009
17274.2 8357.2 447.2

March 2010
17235.9 7988.8 446.1

Total

22717.1

26078.6

25670.8
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INTERNATIONAL BOND AMOUNTS OUTSTANDING BY MAJOR ISSURES

ISSURES Financial Institutions Governments International Organizations
Corporate Issuers Total

Dec. 2008 17,925.70 1,794.60 637.90

2,359.00 22717.20

Dec. 2009 20,030.10 2,232.20 791.50

3,024.70 26078.50

March 2010 19,531.10 2,254.40 814.10

3,071.20 25670.80
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INTERNATIONAL BOND AMOUNTS OUTSTANDING BY MAJOR CURRENCIES

CURRENCIES Dec. 2008 Dec. 2009 March 2010

Euro
US Dollar Pound Sterling Yen Other Total

10873.9
8215.1 1701.8 746.7 1179.7 22717.2

12387.6
9429.0 2145.5 693.9 1422.5 26078.5

11813.8
9718.1 2028.3 668.7 1441.9 25670.8
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WHAT IS DOMESTIC BOND

Bonds help acquire orders and, in many cases, are a precondition for successful conclusion of a contract.

For all entrepreneurs planning to enter tenders and conclude contracts for the delivery of goods or services we offer a wide range of domestic contract bonds.

MEANING OF DOMESTIC BOND

Bonds issued in the country and currency in which they are traded. Unlike international bonds, domestic bonds are not subject to currency risk. They usually carry less risk, as the regulatory and taxation requirements are usually known to investors in domestic bonds, or at least to their brokers and accountants.

TYPES OF DOMESTIC BOND

Public Sector Undertaking Bonds Corporate Bonds

Financial Institutions and Banks

Emerging Bond Markets Tax-Savings Bonds

WHAT IS EUROBOND ?
A euro bond is a debt contract between a borrower and an investor, which records the borrower's obligation to pay interest and the principal amount of the bond on specified dates. For -A firm issuing Yen bonds outside Japan . When a Japanese firm issues yen bonds in the Euro market.

THE PROCEDURE FOR THE EUROBOND

1) Select a Lead Manager:- The borrower chooses one investment bank to be the lead manager of the bond issue. Organize a Syndicate:- The lead manager negotiates with other banks to form managing group. This group then negotiates the terms of the bond issue with the borrower.

1)

2) Selling the Bonds:-Once the syndicate is formed and the terms of the issue are agreed upon, the managing group buys the bonds from the borrower. The managing group then sells the euro bonds to the underwriters. 3) Principal Paying Agent:-A agent or trustee may also be appointed by the borrower to handle the paperwork and legal aspects of the euro bond issue and act as principal agent.

UNIQUE CHARACTERISTICS OF EUROBOND

1) Coupon (The Interest Rate)
2) Maturity 3) Issuer

4) Secondary Market
5) Ratings 6) Taxation 7) A Eurobond is only for Medium and Long-term

ADVANTAGES & DISADVANTAGES FOR COMPANIES TO ISSUE EUROBONDS

Advantages
Large amounts
Freedom and Flexibility Lower cost of issue Lower interest cost Longer maturities

Disadvantages
There are issue costs to take into account.

If the debt is not matched firm may have to be open to foreign exchange risk.

ADVANTAGES & DISADVANTAGES FOR INVESTOR TO ISSUE EUROBONDS

Advantages
Tax free income Low Risk investment Convertible to Equity There is always the risk defaulter.

Disadvantages
Not a good idea for investors who may need a repayment.

Liquid investment

INTRODUCTUON ON FOREIGN BOND

Foreign bonds are regulated by the domestic market authorities and are usually given nicknames that refer to the domestic market in which they are being offered.

A foreign bond allows an investor a measure of international diversification without subjection to the risk of changes in relative currency values.

DISTINCTION
Foreign Bond market
-Foreign government or corporation or international institution US-SEC-Register -Local currency Typically US $50-500 Millions -Bearer expect , in Bulldog and Yankee markets -As in corresponding domestic market -Foreign stock exchange -Domestic and overseas

Euro Bond market

-Any borrower with credit standing explicit rating rate -Any widely used by international country Typically US $50-500 Millions -Bearer -Annual for fixed rate bond and quarterly for FRNs -Usually London Luxembourg -Wide international profile. Private individual play a major role

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