Market Features of International Markets

Market Features of International Markets

1. Both investors and borrowers are well-known names in the international market.
2. These loans are unsecured and no government guarantee either. Only creditworthy borrowers are generally approaching this market.
3. Country’s credit rating and borrowing party’s credit rating rate being looked into; rating by standard and poor or moody’s are popular for assessing the creditworthiness of borrower.

Regulations

The market is functioning outside the countries and is offshore in nature. No regulation of any national and international nature exists. The market practices in the secondary market trading are based on the rules laid down by Association of lnternational Bond dealers.
Same parent companies and some foreign governments do guarantee the interest and payment of principal. The interest payment is provided in the agreement itself and stricter controls
are exercised in the collection of interest, although these rates are lower than those on national bonds of any country.

Euro Currency Market

The Euro currency market refers to funds channeled via financial intermediaries from international lenders to international borrowers. The Eurocurrency markets provide the short to medium term debt required by banks, corporate and government borrowers.
The source of these funds is domestic bank deposits whose ownership is transferred to bank outside the controlled domestic monetary systems. The deposits are in large denominations,
frequently $ 100,000 or more, and the banks use them to make Eurocurrency loans to quality borrowers. The Eurocurrency deposit rate is usually slightly higher than the rate paid by the domestic banks.

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