International Bonds: Credit Ratings

Why do most International binds have risque Moody or Standard & Poors realization paygrades? Credit Rating Is a social Intermediary service to provide credit knowledge and credit for the community. Credit rating Is alma to show the size of a credit oversight risk the rating object, rating agencies focus on financial conditions and historical data to give the overall valuation of object. Currently, credit rating on the hold out of international perplexs is the popular investment risk valuation method acting in the international capital market.Specifically, this is assessed on debt servicing capacity of the foreshorten bonds in a period, its fundamental purpose is to protect the interests of investors. At present, on that plosive speech sound are about 20 credit rating agencies on the issue of international bonds over the world, Moody, Standard & Poors are the top 2 cornerstone all over the world. Though they are private institution, but the rating scale and guidelines gr adually become recognized as Internationally current samples with considerable authority. Credit rating Is the traffic permit for bond issuer to enter theInternational bond markets. International bonds with high credit rating mastered the global Information dominance and capital allocation rights. The rating will directly be active the level of costs and interest governs of oversea companies, it also bed affect the strength of a business or even the option and development of a country. Credit rating could provide objective and frank credit information in order to strengthen management, avoid risks, optimize investment, boost gross revenue and improve efficiency.High credit rating plunder ontogenesis the international business community awareness, improve competitiveness, to expand markets, increase sales and achieve rapid development of enterprises, expanding the scope of corporate finance at the same time, promoting financing success. High credit rating also can reduce fina ncing costs in international enterprises. Companies with high credit ratings can get more than credit policy In sparing exchanges, easily to expand the scale of financing, therefore reduce financing costs.Q. What should a borrower consider before issuing dual-currency bonds? What should an investor consider before investing in dual-currency bonds? Dual-currency nod is a bond that is issued in a currency and pays coupons in the currency as well. At due date, the capital is paid in another currency. The coupon rates for dual- currency bonds are usually high than other straight fixed-rate bonds. The amount of principal would set when the bond is issued found on currency appreciate.There are many motivations for Issuing the dual-currency bond, but the loading reason is due to the long-term foreign currency offered by imprecate are rarely more than a decade, it must be apply In order to avoid the foreign exchange risk. Exchange rate uncertainty would primarily considerate for both the borrower and Investor when dealing with dual-currency bonds. Currency version will Influence whether a borrower or issuer will gain or issue. As for the borrower, if the issued currency appreciates or principal, thus, the borrowers will benefit.However, if the issued and coupon currency discredit or principal currency appreciates, the borrower will suffer a loss from exchange rates. As for the investor are opposite to borrower. If the principal currency appreciates or issued currency depreciates, the principal repayment they chive will be more valuable than the issued currency repayment, thus, the investors will benefit. On the contrary, they will suffer a loss from exchange rates. Normally, coupon rate dual-currency bond is higher than the single-currency bonds.On the publishers point of view, the repayment in different currencies may get lower risk, therefore, the bond issuers were willing to pay a higher coupon rate in order to reduce exchange rate risk, and choose to pay the dual-currency bond. Q. treat the process of bringing a new international bonds issue to market. The main(prenominal) international bond issuance processes are as follows (1) The issuer will butt an investment banker and ask it to serve as lead manager of an underwriting syndicate.