INTERNATIONAL FINANCE

International Finance

International Finance

Introduction

The international bond markets refers both to the sets of broker-dealer over the-counter debt capital markets, trading bonds issued by government, municipalities or corporate organizations and the various fast growing electronic bond trading platforms resulting from either single initiatives or more frequently from a consortium of banks and dealers like Trade Web, Broker Tec, Euro MTS, Weber, espied, Bond Book, Bond Desk and many more. In the bond market, it is usually also separates the primary market, corresponding to the issue of new bonds from the secondary market, trading existing bonds. (Michael, 1984)

In contrast to equity stock market, there is no such as things as exchanges, although the emergence of trading platform may finally lead to similar environment as electronic stock exchanges. The international bond market share in fact a set of fragmented broker dealer markets, often split by the country where the bond has been issued, and regulated by the national regulatory entities (like for instance the SEC1 in the US or the FSA in the UK) (Byline, 2003).Traditionally, one also makes a distinction between the reference entities of the bond, leading to three different markets:

Government bonds

Municipal bonds

Corporate bonds

Rational behind the bond market is to use the effectiveness of economic markets to finance authorities, localized administration, municipalities and companies for various tasks, undertakings and businesses (Arthur, 2003). The bond issuer has a repaired liability or a responsibility to yield to the debtors some cash flow. Bonds generally yield coupon, although, there are some bonds giving only once at maturity called none coupon bond in compare to usual coupon bearerbonds. Usually, bonds are traded in a publication application pattern, significance that the name and persona of the bondholder is listed in a computer publication application form. (Arthur, 2003)

Government Bond Markets

It is used mainly to investment the public liability of nations; government bonds represent a considerable allowance of the bond markets, with the very large part for US government bonds. Usually, one furthermore makes a distinction between developing nations government bond mentioned to as appearing markets bonds and evolved nations like the US, Europe or Japan. Government bond are mostly handed out by the State Treasury bureau of the homeland although the Central bank may in certain nations be furthermore adept to topic government bonds (referred to as gobies by traders). (Michael, 1984)

According to the maturity, US Bonds are called accounts (maturity less than 1 year and generally none ...