Global Capital Markets
1. Executive Summary
This report will evaluate the advantages and disadvantages of raising long term debt and equity capital via the global capital markets as opposed to the more traditional methods employed by the company of raising funds through the domestic markets.
2. Global Capital Revenue v Domestic
Raising capital in the global market place has a number of advantages over raising capital solely in the domestic market place. The first advantage is that by going global it will open the company up a larger market and will provide far more opportunities to raise capital as opposed to only raising capital in the domestic capital market which will severely restrict the number of potential investors. Also by raising capital globally it will lessen the risks involved and associated with raising capital by diversifying the businesses portfolio of investment. It will allow the company to share the risk through several markets as opposed to relying solely on one market. Finally there are also tax benefits to be gained by opening up the portfolio to the global market place. As the capital will be raised in foreign countries the regulations governing it may be different thus the possibility of financial benefits such as tax breaks. The specific advantages and disadvantages of raising capital globally will be discussed in more depth in this report. The following sections will look at the two main ways of raising international finance; international bonds and international equity.
3. International Bond Markets
The term ‘International Bond Market’ refers to two different types of bond; the foreign bond and the Eurobond. The following sections will look at these two types of bonds and evaluate the advantages and disadvantages.
3.1 Eurobond
A Eurobond is issued in the domestic currency of the issuer but sold outside of the issuer’s domestic market. The bond is under written by a syndicate of internationally diverse investment banks and is placed on to the bond market
This report will evaluate the advantages and disadvantages of raising long term debt and equity capital via the global capital markets as opposed to the more traditional methods employed by the company of raising funds through the domestic markets.
2. Global Capital Revenue v Domestic
Raising capital in the global market place has a number of advantages over raising capital solely in the domestic market place. The first advantage is that by going global it will open the company up a larger market and will provide far more opportunities to raise capital as opposed to only raising capital in the domestic capital market which will severely restrict the number of potential investors. Also by raising capital globally it will lessen the risks involved and associated with raising capital by diversifying the businesses portfolio of investment. It will allow the company to share the risk through several markets as opposed to relying solely on one market. Finally there are also tax benefits to be gained by opening up the portfolio to the global market place. As the capital will be raised in foreign countries the regulations governing it may be different thus the possibility of financial benefits such as tax breaks. The specific advantages and disadvantages of raising capital globally will be discussed in more depth in this report. The following sections will look at the two main ways of raising international finance; international bonds and international equity.
3. International Bond Markets
The term ‘International Bond Market’ refers to two different types of bond; the foreign bond and the Eurobond. The following sections will look at these two types of bonds and evaluate the advantages and disadvantages.
3.1 Eurobond
A Eurobond is issued in the domestic currency of the issuer but sold outside of the issuer’s domestic market. The bond is under written by a syndicate of internationally diverse investment banks and is placed on to the bond market