SECURITIES MARKET AND ITS PARTICIPANTS 3
1 Essence, tasks and functions of the securities market 3
2 Market types valuable papers 6
3 Structure of the securities market 9
4 Participants in the securities market 10
SECURITIES. OPERATIONS IN THE SECURITIES MARKET 16
1 Essence and types of securities 16
2 Operations with securities 21
1 The concept and fundamental properties of shares 25
2. Valuation of shares 28
3. Acquisition and redemption of shares 31
BONDS 34
1 Classification of bonds 36
2 Bond pricing 37
Interest rate structure 39
Curve Interest Rates 39
3 Bond risks. Duration and convexity 40
Duration and convexity 41
GOVERNMENT SECURITIES 42
1 Types of government bonds 44
2 Participants in the government bond market. Market infrastructure 50
3 Operations in the government bond market 52
INTERNATIONAL SECURITIES 55
1 The essence of international securities and their types 56
2 Organization of Eurobond issue 59
SHORT-TERM FINANCIAL INSTRUMENTS 63
1. Deposit and savings certificates. Price and profitability of deposit and savings certificates 64
2. Bills. Price and yield of a bill 66
3. Commercial securities. Exchange-traded bonds 68
DERIVATIVE SECURITIES 70
1. Subscription rights and warrants 70
2. Options 72
Option price 74
Using Options 75
Issuing options 75
3. Futures contracts 76
BASICS OF INVESTMENT PORTFOLIO MANAGEMENT 79
1 The concept of a portfolio of securities. Portfolio types 79
2 Portfolio management 81
FUNDAMENTAL ANALYSIS OF THE INVESTMENT ATTRACTIVENESS OF SECURITIES 84
TECHNICAL ANALYSIS IN THE SECURITIES MARKET 87
1 Technical analysis. General provisions 87
2 Graphical analysis 89
3 Eliot Wave Theory 99
1 The essence of international securities and their types 53
2 Organization of Eurobond issue 56
1 The essence of international securities and their types
The official definition of eurobonds is given in the Directive of the Commission of the European Communities dated March 17, 1989, which regulates the procedure for offering new issues on the European market.
For the purposes of this Directive, euro papers are traded securities with the following characteristic features, namely:
Are underwritten and placed through a syndicate, at least two members of which are registered in different countries;
offered in significant volumes in one or more countries other than the issuer's country of incorporation;
Can only be initially acquired through the mediation of a credit institution or other financial institution.
Euro papers include:
Euronotes(medium-term euronotes, EMTNs) - medium-term registered bonds, which are usually issued for a specific investor. The main advantage of euronotes is the possibility to organize their issue in a few days or even hours. Thanks to this, as well as low issuance costs, the euronote sector has tripled over the past six years. True, the central banks of the main European countries impose serious restrictions on their issue.
euro bills(euro-commercial paper, ECP) - unsecured obligations that are not intended for public offering and are not traded on the secondary market. As a rule, euro bills are issued for a period of one to five years by companies whose solvency is not in doubt. International bonds (international bonds).
The latter, in turn, are divided into:
eurobonds;
foreign bonds foreigh bonds;
global bonds global bonds;
parallel bonds parallel bonds.
Eurobonds. Eurobonds are bonds that are not denominated in the currency of the issuer's host country and which are placed both outside the issuer's host country and outside the country in whose currency they are nominated. Eurobonds are usually placed on international bond markets.
There are several characteristic features that distinguish Eurobonds from other forms of borrowing:
Eurobonds are placed simultaneously on the markets of several countries, while the currency of the Eurobond loan is not necessarily national, both for the lender and for the borrower.
The placement is carried out by an issuing syndicate, which, as a rule, is represented by banks registered in different countries.
The issue and circulation of Eurobonds is carried out in accordance with the rules and standards established in the market. The bulk of Eurobond issues are made without collateral, although in some cases it is possible to provide collateral in the form of a guarantee of third parties or the issuer's property. The issue of Eurobonds is accompanied by a number of additional conditions and clauses designed to reduce risks for holders of securities. The most common are the so-called. "negative pledge" (the terms of the issue provide for the issuer's obligation not to issue any more securities with a pre-emptive right to redeem). In the event of a technical default (non-payment) on any one issue of Eurobonds, a cross-default is provided - early redemption of all issues of Eurobonds in circulation. The issue of bonds, as a rule, is conditioned by the issuer's obligations to maintain a certain ratio of equity and debt capital, limit the issuance of other debt obligations within a specified period of time.
Eurobonds are usually bearer bonds.
Eurobond yields are paid in full without withholding tax in the issuer's country. If local legislation provides for withholding tax on interest paid by the borrower, the latter is obliged to bring the amount of interest payments to a level that provides the investor with interest income equal to the nominal coupon.
A variety of eurobonds are bonds "dragon" - dragon bonds - euro-dollar bonds placed on the Asian (primarily Japanese) market and listed on any Asian stock exchange, usually in Singapore or Hong Kong.
The share of Eurobonds in the Eurobond market is over 90%. Currently, the total value of outstanding Eurobond loans is approximately 4 trillion. dollars, which is about 10% of the global bond market.
The prefix "euro" is now a tribute to tradition, since the first Eurobonds appeared in Europe, they are traded mainly there.
The issuer can place bonds both within the country and abroad. Bonds placed by the issuer outside the country - the issuer's ownership, are called international bonds. There are such varieties of these bonds as foreign bonds and Eurobonds.
Foreign or foreign bonds are placed by the issuer outside the country in which the issuer is located, in the currency of the country of placement. Such bonds often receive specific names. Thus, foreign bonds placed in the United States and denominated in US dollars are referred to as "yankees" ("yankee bonds"). Bonds issued by non-residents in the UK are called "bulldogs" ("bulldogs bonds"), in Japan - "samurai".
Global bonds are bonds placed simultaneously on the Eurobond market and on one or more national markets.
Parallel bonds parallel bonds - bonds of the same issue, placed simultaneously in several countries in the currency of these countries.
The term "international bonds" is used in a broad and narrow sense. In a broad sense, this concept includes all the main debt instruments placed on foreign markets, that is, these are long-term debt instruments or, in fact, bonds (bonds), and medium-term debt instruments (notes).
The development of the international bond market is associated with the growth of transnational corporations and the internationalization of economic life. The issuance of international bonds allows individual states and large companies to meet their capital needs by attracting it to the markets of other countries.
The point of acquiring foreign bonds for an investor is that he gets the opportunity to make an international diversification of the risk of non-payment on his investments and reduce the risk from possible fluctuations in exchange rates. For example, a French investor may purchase bonds of an American corporation denominated in dollars. Let us assume that at the time of the purchase of the bonds the exchange rate of the dollar against the euro was 1:1. Some time later, at the time of payment of interest, the exchange rate of the dollar against the euro was, for example, 1.2:1. The investor must convert the interest income into euros at the current exchange rate, therefore, he will suffer losses. If an investor purchases bonds of an American company denominated in euros, then he does not have to worry about the exchange rate.
The first more or less significant issues of foreign bonds placed by foreign issuers in Western Europe and North America appeared in the second half of the 1940s. XX century, but the process of issuing foreign bonds began to develop most actively in the early 60s.
The issue of foreign bonds must be carried out in accordance with the rules of the country where the bonds are placed. However, in the field of taxation and circulation on the secondary market, foreign bonds are very close to Eurobonds.
The emergence of the Eurobond market is usually attributed to 1963, when the Italian company Concessioni e Costruzioni Autosfade issued a loan for $15 million, although several similar loans had been made earlier. From the end of the 60s. the rapid growth of Euro-loan issues begins. If in the 70s. Since the volume of Eurobonds issue was approximately equal to the volume of foreign bonds issue, then, starting from 1982, Eurobond issues began to overtake foreign bond issues, and in the 90s. Eurobond issue volumes have already exceeded foreign bond issue volumes by several times.
As statistics show, from half to 2/3 of all Eurobonds are issued by corporations, and the rest - approximately in equal shares - is carried out by the governments of various states and international organizations. To successfully place bonds on international markets, an issuer should receive a rating from at least one of the rating agencies (and preferably several), such as Standard and Poor's, Moody's, etc.
Eurobonds are divided into long-term securities - eurobonds (eurobonds) and medium-term debt securities - euronotes (euronotes). In addition, short-term papers, the so-called eurocommercial bills, also belong to eurobonds. But these short-term instruments are usually not included in the concept of Eurobonds.
The difference between Eurobonds and Euronotes is rather conditional. They differ only in duration. However, some issues of Eurobonds and Euronotes do not even have these differences. The issuance of Eurobonds provides an advantage for both issuers and investors. The issuer usually does not pay any taxes for issuing Eurobonds. Interest income on bonds is paid to the investor in full, who pays tax under the laws of the country of which he is a resident. Eurobonds are usually issued in bearer form with tear-off coupons. Repayment is made in a single payment or over a period of time from a sinking fund. In the latter case, the issuer either redeems the bonds on the open market or conducts periodic redemption runs at par. The following types of Eurobonds can be distinguished.
Fixed income bonds(fixed rate bonds). The amount of coupon income does not change during the entire period of validity. These bonds are issued by issuers with a high credit rating (states, corporations, financial institutions). These bonds account for about 80% of all Eurobonds issued. Some of these bonds are callable.
Bonds with a variable interest rate are characterized by the fact that interest income on them varies depending on the state of the financial market. The interest rate on them is tied, for example, to the Libor rate or to the level of yield on US Treasury bills, with some premium to these values. The coupon period for such bonds is usually 3 or 6 months.
Zero coupon bonds are characterized by the fact that the investor's income is formed due to the difference between the redemption price and the issue price. At the same time, some bonds (growth bonds) are placed at face value and redeemed at a price higher than face value. For example, Dentsche Bank Finance NK issued 10-year bonds in 1985 that were redeemed in 1995 at a price equal to 287% of par. Deep discount bonds are sold below par and redeem at par. For example, in 1997, the World Bank issued bonds in Italian lira at a price of 51.7% of par, maturing in 2007 at par.
Convertible Eurobonds are characterized by the fact that after a certain period of time they can be exchanged for ordinary shares of the issuing company at a certain rate.
Eurobonds can be issued in different currencies. Until the beginning of the 80s. the main currency (up to 80% of all issues) was the US dollar. To date, the share of Eurobonds in US dollars has decreased to one third.
In international practice, there are several types of transactions with securities:
- purchase of securities;
- sale of securities;
- repo operations;
- · operations of crediting by securities and operations of attraction of securities in a loan;
- operations of pledge (mortgage) of securities.
Settlements for these transactions can be made in the following forms:
- · “delivery / receipt of securities without payment”;
- · “delivery / receipt of securities against payment”.
Delivery or receipt of securities without payment is the simplest form of settlement, in which the depository only transfers securities to the securities accounts of counterparties in the transaction, and cash settlements occur outside the depository.
However, with this form of settlement, there is a risk that counterparties-buyers of securities will not fulfill their obligations to transfer funds to sellers of securities. Therefore, this form of payment is usually used when transferring securities on the accounts of one client, for example, from an owner's account to a nominee account or when transferring securities from one depository to another. Also, the delivery or receipt of securities without payment may be used when performing operations of pledge (pledge) of securities or in the case when the depository is not a banking institution and is not entitled to open and maintain clients' money accounts.
In order to reduce the risk of default by counterparties of their obligations under a transaction, settlements in the form of “delivery / receipt of securities against payment” are used in practice. This form of settlement provides for the simultaneous transfer by the depository of securities on depo accounts and the corresponding amount of money on counterparties' cash accounts.
Settlements in the form of "delivery / receipt of securities against payment" became widespread in international practice in the early 90s of the twentieth century.
During the crisis in the international stock market in 1987, there was a problem of massive defaults on securities transactions. In this regard, in 1989
The G30 developed recommendations to improve the efficiency of securities settlements, in particular, they recommended the widespread introduction into the practice of settlements in the form of “delivery / receipt of securities against payment” Ermakov S.L., Belyaev M.K. Banking. Careful about the complex. - M.: Vershina, 2008. - p. 89..
To make settlements in this form, counterparties must have depo and cash accounts opened with the depository. The vast majority of securities purchase / sale transactions are carried out in this form, since in this case the depository has the ability to control the execution of the monetary part of the settlements, which eliminates the risk of counterparties defaulting on obligations under the transaction (Fig. 1).
Figure 1. Scheme of transactions in the form of "delivery of securities against payment"
In connection with the widespread use in international practice of transactions in the form of "delivery / receipt of securities against payment", custodians open for their clients the so-called settlement and clearing accounts (Securities Clearance Accounts), through which the movement of cash and securities is carried out simultaneously.
To carry out settlements, after the conclusion and execution of the transaction, the counterparties send instructions to the custodian to conduct transactions. These instructions must contain the following required details:
- number of settlement and clearing account with the custodian;
- · the name of the counterparty and the number of the settlement and clearing account with the custodian;
- the date of the transaction;
- value date;
- the number or amount of the face value of securities;
- · ISIN-code of securities;
- form of payment (without payment / against payment) Olkhova R.G. Banking. Management in a modern bank. - M.: KnoRus, 2009. - p. 137..
When making settlements in the form of “delivery / receipt of securities without payment”, on the basis of instructions from counterparties, the custodian transfers securities from the securities account of the counterparty-seller of securities and credits them to the securities account of the counterparty-buyer of securities. After settlements are completed, the custodian sends counterparties confirmations of transactions and depo account statements, which reflect the movement of securities.
According to established terminology international securities- these are securities placed on international financial markets external to the country of the issuer of these securities.
The process of integration of countries with market economy taking place in the world requires the creation of a common financial market for an effective investment policy. A lot of experience has already been gained in the implementation of international investment projects. Securities issued by banks and corporations of some countries are circulated in large volumes on the international securities market for distribution to other countries. Complete abolition in the 1970s restrictions on the movement of capital to developed countries created the conditions for the formation of an international securities market. In just 10 years (1980–1990), the share of international transactions with securities in the US GDP increased from 9 to 93%, in Germany from 8 to 58, and in Japan from 7 to 119%. In the total amount of funds borrowed on the international capital market, the largest part falls on bonds (in 1994 - more than 60%). Almost 40% of the world securities market is in the USA, Japan - over 20%.
The global financial market is increasingly taking on the form of a two-tier system in which top level- supranational - represented by the circulation of securities of leading transnational corporations, and the lower - national - by the circulation of securities of national companies. Each of these levels has the corresponding institutions of the financial market - international or national.
The international securities market, like national markets, consists of primary and secondary markets. On primary market the issuer of one country places its securities in another country or other countries, and in the secondary market the securities are resold through special financial institutions. Major buyers and sellers of secondary market securities are central and commercial banks, insurance companies and other non-banking institutions.
In the last decade, the attractiveness of the Eurobond market has increased. Euroinstruments are shares, notes, bonds, derivative securities (derivatives) placed on international financial markets external to the issuer's country.
Eurobonds are issued by national governments, municipalities, banks, international credit organizations, transnational corporations. External loans in the form of Eurobonds are actively used by them as an additional source of financing, especially in conditions of limited financial resources in developing countries with a credit rating of "BB" (Mexico, Brazil, Argentina, Venezuela, a number of countries in Eastern Europe, Russia). There was even a special type of bonds - PAR-
Bonds , which are exchanged for the corresponding debts of countries at par. These bonds correspond to a set of fixed coupon payments, the rates for which are often below market rates. These bonds are also called brady bonds but named after the US Treasury Secretary, who proposed this method of debt restructuring, when in the late 1980s and early 1990s. international financial institutions are faced with the problem of non-repayment of large loans by developing countries. PAR -bonds are issued for a period of 25 to 30 years, which provides issuers with a preferential procedure for repaying debt obligations.
Eurobonds are predominantly bearer securities, i.e. their owners are not registered. These bonds are issued and sold mainly outside the domestic market of the currency in which their denomination is indicated. At the same time, Eurobonds are denominated in currencies that occupy a leading position in international trade.
Desiring to obtain significant additional funds by issuing bonds, a large borrower has the opportunity to enter the international market. In the external market, the bond issue can be divided into foreign issue and Eurobond issue. Foreign bonds are issued by a non-resident in a country in the currency of that country, in other words, a foreign issue is placed in London in pounds sterling, in Tokyo in yen, etc. Eurobonds are placed on several national markets, but in a currency that is foreign in relation to the country of their placement.
The following main types of securities are traded on the European market:
- - bonds with a fixed rate of return (coupon payments);
- – floating rate bonds. The amount of coupon payments consists of two parts - the value of the most commonly used rate (for example, LIBOR ) , plus a fixed positive margin that stays the same. The maturity of such bonds is from 5 to 15 years;
- - two types of bonds associated with the issuer's shares - convertible into ordinary shares of the issuer on predetermined terms and bonds with warrants. A warrant is similar to a call option, but can be exercised over a longer period, making the bonds more attractive.
The first Eurobonds appeared in the early 1960s. in connection with the internationalization of economic life and the liberalization of the financial markets of the USA, Germany and Japan.
In 1987–1991 the largest share of borrowings in the European market was observed from Japanese issuers (banks and industrial corporations). In 1995–1996 the governments of Eastern European countries and the administrations of the largest cities of these countries entered the Eurobond market. Russia first placed its own Eurobonds in November 1996. Then in 1997-1998. The Russian government placed several more loans. In the same years, the governments of a number of constituent entities of the Russian Federation entered the Eurobond market: Moscow, St. Petersburg, Nizhny Novgorod, Sverdlovsk regions, Tatarstan, as well as private issuers. Currently, professional participants in the Eurobond market are represented mainly by large banks and securities companies.
Among debt securities on the European market, common Euro debentures (euronotes ). These medium-term securities account for 50-60% of new issues. Obligations denominated in US currency account for about half of the market, in German marks - 15% and Japanese yen - 10%. In addition, currencies such as the Argentine pesos, Polish zlotys, Croatian kunas and Russian rubles have appeared, and since 1999 Eurobonds have been issued denominated in euros.
On the European market, there are short-term debt obligations with a maturity of one to six months. Each issue of theirs is underwritten, syndicated and hosted. If the borrower fails to place the next issue of debt obligations, the members of the syndicate undertake to buy back the remaining unplaced securities at a price not lower than the announced (rate LIBOR plus margin).
A relatively new instrument on the European market - commercial obligations the peculiarity of which is that they do not go through underwriting. Banks - members of the syndicate undertake to place the borrower's securities on agreed terms, but at the same time they do not undertake to redeem under-placed obligations.
The term of circulation of commercial obligations on the European market is from several months to several years. Unlike similar securities in the US, Eurocommercial bonds are issued for a longer period (in the US domestic market, their maturity is 60–180 days). In addition, the issuers of these securities must undergo a rating procedure, which explains the relative decline in the share of these securities on the European market in the 1990s. and heightened investor interest in medium-term debt.
A significant role in the Eurobond market is played by euro deposit certificates (DS), intended mainly for large institutional investors. The main DS issuers are branches of leading American, British, Canadian, Japanese and European banks. DS are issued for a period of three to six months and have a fixed interest rate. There are DS with longer maturities and with a floating interest rate.
On January 1, 1999, the third stage of the formation of the European Economic and Monetary Union began ( EEAS ). With the introduction into circulation in the territory of 11 countries of Europe, a single monetary unit euro, a new monetary and financial union arose - the eurozone, where 11 capital markets of these countries were transformed into a united internal capital market of the European Union.
As a result, there have been important changes in the structure and trends of the market, the behavior of investors and borrowers in the euro area. Insurance and investment companies, private pension funds and banks, which traditionally prefer reliable government securities, have turned their attention to higher-yielding private corporate securities and new secondary debt market instruments. In turn, borrowers, seeking to expand their liquid base, increasingly resort to issuing bonds and various derivative securities. First of all, this applies to companies and mortgage banks that have reliable security.
The introduction of the single euro currency and the creation of a stable situation determined the presence of prerequisites for accelerating the development of the corporate bond market. The volume of issues of not only high-rated corporate bonds, but also high-yielding securities with a lower rating increased. The market shows rather high demand for such bonds.
A serious impact on the development of the Eurobond market was made by the transition of the EU countries to a single currency - the euro, which, on January 1, 1999, acquired the status of the official currency of 11 countries, and their own currencies became its fractional expressions.
Modern Russia is a fairly active participant in the international securities market.
In particular, after a two-year break in 2012, a large volume of RF currency Eurobonds, differentiated in terms of terms and beneficial for issuers, was placed, which created the preconditions for Russian corporate borrowers to actively enter the global market.
The former EU unit of account - the ECU was replaced by the euro in a ratio of 1: 1, then after the necessary preparatory period from January 1, 2002, the euro became the currency in cash, and from July 1, 2002, after the exchange of old banknotes for new ones, - the only zone currency.
World economic integration and globalization will intensify the creation of common financial markets, including the securities market. Among the main reasons for the dynamic development of international securities and their markets in the last decade are the following:
1) the abolition of restrictions on the movement of capital;
2) growth of investments and requirements for their efficiency;
3) development of transnational capital;
4) variety of financial instruments;
5) the possibility of obtaining additional sources of borrowing;
6) the introduction of the euro currency on the territory of the European Union and its strengthening in subsequent years;
7) traditions of circulation on the national securities markets of foreign issuers.
According to the established terminology, bonds placed on foreign markets are called international - international bonds.
In turn, international bonds are divided into Eurobonds- eurobondsand foreign bonds - foreign bonds.
Eurobonds- securities issued in a currency that is foreign for the issuer (as a rule), placed with the help of an international syndicate of underwriters among foreign investors, for whom this currency is also, as a rule, foreign.
The prefix "euro" is now a tribute to tradition, since the first Eurobonds appeared in Europe, they are traded mainly in the same place.
Bonds are a type of Eurobonds. dragon" - dragon bonds- Eurodollar bonds placed on the Asian (primarily Japanese) market and listed on some Asian stock exchange, usually in Singapore or Hong Kong.
Foreign bonds - issued and placed by the issuer in any foreign state in the currency of this country with the help of a syndicate of underwriters from this country in the currency of the countries where loans are placed (the so-called bonds " yankees" - yankee bonds in USA; " samurai" - samurai bonds, "shibosai" - shibosai bonds, "daimio" - daimyo bonds, "shagun" - shogun bonds in Japan; " bulldog" - bulldog bonds in England; " Rembrandt" - Rembrandt bonds in Holland; "matador" - matador bonds in Spain ; "kangaroo"-kangaroo bonds Australia.
What is the difference between foreign bonds and ordinary "domestic" bonds? As a rule, the differences relate to:
the taxation regime;
methods of placement
the volume of information provided;
Restrictions on the circle of potential buyers are possible.
International bonds include the so-called global bonds - global bonds(bonds placed simultaneously on the Eurobond market and on one or more national markets) and parallel bonds - parallel bonds(bonds of one issue placed simultaneously in several countries in the currency of these countries).
The term "international bonds" is used in a broad and narrow sense. In a broad sense, this concept includes all major debt instruments placed on foreign markets, that is, these are long-term debt instruments or, in fact, bonds (bonds), and medium-term debt instruments (notes). Short-term instruments - certificates of deposit and commercial paper - are not included in this concept. In a narrow sense, international bonds are precisely long-term instruments - bonds.
It should be borne in mind that the differences between medium- and long-term bonds are rather arbitrary. The latter are often no different from the former even in timing. The difference is often only in the name, and also, usually with floating interest rates ( floating rate), while bonds are currently fixed-rate instruments (again, exceptions are possible).
Long-term, medium-term and short-term debt obligations, as well as shares placed on international markets, give the concept europaper.
Main types of international securities magician is debt securities (government and corporate obligations in the form of bonds, bills, certificates of deposit). Of all types of securities markets, the Eurobond market is characterized by the greatest variety of instruments. It can be noted that with the development of the euro zone, the terms “euro instruments”, “euro papers” and the names of securities with the euro prefix are increasingly used in the international securities market.
In recent years, in connection with the development of the financial market of the EU countries, the interest of investors in the Eurobond market has been growing. These are mainly euronotes, eurobonds, euroshares, derivatives, depositary receipts, europromissory notes.
Typical Eurobond- a bearer security in the form of a certificate with a fixed interest rate, for which income exists in coupon form, is paid once by presenting coupons for payment, or redemption is made at the end of the term in a lump sum or within a certain period from a sinking fund.
Consider types and features international securities.
Widespread on the Eurobond market convertible bonds (convertible bonds) And warrant bonds (warrant bonds). They give the right to convert the bonds into shares of the issuer. The largest issuers of convertible bonds are Japanese corporations that issue bonds in dollars with conversion into shares in yen. Bonds without conversion privileges are called " ordinary" - straight bonds.
Eurobonds are issued by large, mainly transnational corporations, international organizations (for example, the World Bank) and government bodies for sale to investors worldwide. When bonds are issued by government agents or local governments, government guarantees are usually required.
From half to two-thirds of all Eurobond loans are owned by corporations, the rest - approximately equally by governments, government bodies and international organizations.
Among issuers - municipal authorities - the most active in the Eurobond market are the governments of the German lands, the provinces of Canada and the states of Australia. A recent example of municipal government entry into the Eurobond market is the $300 million mid-term bond issue by New York City in January 1997.
In the 1990s, the governments of a number of Eastern European countries entered the Eurobond market. Russia managed to place its own Eurobonds for the first time (not counting Eurobonds of Vnesheconombank of the USSR) in November 1996.
Thus, the issuers of international securities are:
international financial and credit organizations,
foreign states represented by their governments,
local and municipal authorities,
big banks,
transnational corporations.
The issuing country or organization nominates its securities in foreign currency and intends them for placement and circulation on the securities market in its country or other countries. Accordingly, the securities of the national issuer placed and traded on the market of the issuing country are called internal; securities of a national issuer placed and circulating on the markets of other countries – external. When issuing foreign securities intended for placement on the market of a certain country, a foreign issuer chooses the national currency of this country as the nominal currency. Thus, the issue intended for circulation in the US with the greatest certainty will be made in US dollars, for circulation in the eurozone countries - in euros.
Thus, issuers of international securities denominate their obligations in a currency other than the currency of the issuing country and assign them to investors from different countries.
It should be noted that the main volume of international securities issuance falls on currencies that occupy a leading position in world markets - the US dollar and the euro.
The structure of international debt on issued debt securities looks like this: about 40 percent of bonds are denominated in US currency, less than 15 percent - in Japanese yen, the rest - about 45 percent - in euros.
We classify types of international securities on various grounds.
International securities by issuer differ as state and corporate, which is similar to the general understanding of the content of securities, which we considered earlier.
By terms of circulation international debt securities are different: from short- to long-term. Thus, certificates of deposit have a circulation period of three to six months; bonds are usually issued long-term, with maturities 5-15 years after issue.
Forms of income international debt securities are distinguished as follows:
1) with a fixed interest rate (in the form of coupon payments - for bonds, fixed income - for short-term certificates of deposit);
2) with a floating interest rate, the amount of coupon payments for which consists of two parts:
· the most common rate, for example, LIBOR (LIBOR is the offer rate on the London Interbank Deposit Market);
fixed positive margin.
Interest is paid by separating the coupons and sending them to the bank - paying agent . Usually, shares are kept in a depository, which takes on the functions of collecting coupons for their owners.
Major operators the largest banks and securities companies act on the Eurobond market.
Initially, the Eurobond market was an unregulated market. The need to develop the rules of the game led to the creation of ISMA and its associated group of the International Association of Primary Dealers (International Primary Market Association). In the early 1990s, ISMA had 866 members, including 166 from Great Britain, 138 from Switzerland, 57 from Germany, 60 from Luxembourg. ISMA is headquartered in Switzerland, however most of the work is done in London where the secretariat is located.
ISMA provides all interested parties with information on the Eurobond markets, and also conducts educational seminars with the issuance of diplomas for working on international stock markets.
Since London has been and remains the main center for Eurobond trading, ISMA's activities are mainly carried out in the City. According to UK law, ISMA, on the one hand, has the status of a special exchange, and on the other hand, is recognized by the Securities and Futures Council (SFA) as an international self-regulatory organization in charge of the Eurobond market.
Professional participants in the Eurobond market operating in London are required to comply with all the requirements of the regulatory authorities of this country, primarily the SIB - Securities and Investment Board and the SFA - Securities and Futures Authority.
Placement of primary issues international securities is usually processed through international investment banks, the accounting of rights is usually carried out by the leading clearing houses.
The two main clearinghouses, EUROCLEAR and CEDEL, located in Belgium and Luxembourg respectively, provide settlement and clearing for most Eurobonds by accounting for transactions on the accounts of their clients - investors and market intermediaries (brokers and dealers).
Traditionally, the placement of Eurobonds occurs with a preliminary assignment to the issuer of a credit rating from one of the leading rating agencies.
Typically, issuers entering the Eurobond market have a high credit rating. Top-rated corporations (Triple A) have the opportunity to enter the Eurodollar bond market by setting an interest rate at a level that exceeds US government bond rates by only 25-55 basis points. At the same time, known cases of placement of loans by issuers from South America(Brazil) 600 basis points above the US federal bond rate, i.e. A high credit rating is not an absolute prerequisite for placing a loan. A higher rating simply makes it cheaper to borrow by setting a lower interest rate.
Yield in operations with Eurobonds is comparable to the indicators of domestic government borrowings with the lowest interest rates(for example, the USA, Japan), which allows the issuer to attract cash on the most favorable terms.
The practice of debt restructuring is widely used in the international securities market. Thus, in connection with the large debts of a number of countries in Latin America, Eastern Europe, and Russia, a special type of bonds appeared, exchanged for their debts at par. Such bonds are called PAR-Bonds, they are issued by international financial and credit organizations-creditors, with a maturity period of 25-30 years that is comfortable for the debtor, in the form of income they are coupon (with a fixed coupon), but the rate on declared coupons of PAR-Bonds, as usually below market value.
Significant impact on the international securities market continues to have development of the European Economic and Monetary Union, which appears as follows:
1) changes in the strategies for the formation and management of investments in securities: investors drew attention to the attractiveness of corporate securities and began to give them preference due to their higher yield compared to government securities;
2) in order to diversify the attraction of funds from the issue of equity securities, issuers switch to issues of debt obligations, that is, they give preference to bonds rather than shares; in order to ensure the liquidity of its financial activities prefer to issue not bonds, certificates of deposit and bills, but derivatives, that is, derivative securities;
3) the states have changed the strategy of forming the market of their debt obligations: the profitability of investments in government securities has significantly decreased;
4) there is an improvement in the organization of exchange trading, which manifests itself in two ways: firstly, the completion of the transition of exchange trading to electronic technologies, and secondly, the unification of the largest stock exchanges into a single trading network - the European stock exchange.
Control questions
1. What are the reasons for the development of the international securities market?
2. Name the types of international securities.
3. What are the features of international securities?
4. What do the names "euro-instruments", "euro-papers" mean?
5. How do international debt securities differ by: Issuers? deadlines? forms of income? other signs?
6. What organizations are involved in issuing international securities?
7. How are most Eurobonds settled and cleared?
8. How is the practice of debt restructuring used in the international securities market?
9. How is the yield on operations with Eurobonds and indicators of domestic government borrowings related?
10. What impact does the development of the European Economic and Monetary Union have on the international securities market?
INTERNATIONAL SECURITIES MARKET.
1. World centers of issue and circulation of international securities
2. Main types of international securities
World centers of issue and circulation of international securities
International securities market- this is a set of actually international issues and foreign issues, that is, the issue of securities by foreign issuers on the national market of other countries.
Issues of international bonds began in the mid-1960s.
USA and have the largest market in the world, where stocks have their own characteristics:
1. Ordinary shares have no par value, and their holders usually do not receive rights in the event of additional issues by companies.
2. When companies issue publicly traded shares, they must apply to the U.S. Securities and Exchange Commission and comply with strict disclosure obligations,
Germany(Germany) is a major center for issuing foreign bonds. Issues of foreign bonds and Eurobonds denominated in German marks are registered separately:
Eurobond issues are carried out by international consortiums,
· foreign issues in German marks - by consortiums consisting only of German commercial banks.
Both types of bonds are issued to the bearer, there are no restrictions on their sale to non-residents and interest is not subject to income tax.
Stocks and bods market Great Britain - one of the oldest in the world. In London in 1773, the world's first specialized stock exchange arose.
Shares are mostly registered. The holders of ordinary shares have the right of first priority to purchase shares of the new issue.
The main type of bonds are secured bonds of two types: secured by certain assets and all assets by companies. However, unsecured, convertible and guaranteed bonds are also circulating in the UK market.
Switzerland - the world's most important center for issuing foreign bonds. The issue of foreign bonds in Swiss francs is carried out publicly through the mediation of a banking consortium and is usually issued in high denominations. In the foreign bond market, only international institutions, foreign states and major corporations act as borrowers; interest on foreign bonds is exempt from tax payments.
Stocks and bods market France presented various types shares: ordinary and preferred, voting and non-voting, with one or two voting rights. Ordinary shares are mostly bearer shares. Only shares that are not listed on stock exchanges can be registered. All bonds are issued in non-documentary form, bonds with warrants and convertible bonds are issued.
Bond Market Japan issues both traditional and classic foreign bonds. Japanese stocks are usually issued with a par value of 50 yen. Most of the shares are ordinary. Almost all shares are registered, and those that are listed on stock exchanges are only registered.
Main types of international securities
Eurobonds issued by national issuers in one of the foreign currencies and can be hosted simultaneously in several countries.
Eurobonds are bearer securities, it is not required to register their issue prospectuses with the national authorities of the countries of placement, the circulation period is from 3 to 30 years, are not subject to strict national restrictions.
In world practice, depending from issuer issue Eurobonds:
state or sovereign;
municipal or regional
corporate.
E vronota(EMTNs are securities that are nominal and are shorter. They have a floating rate of interest and are offered at a price below face value.
Eurocommercial papers are a tool money market with maturity up to 1 year. Eurocommercial securities are not secured by property, but they are issued by large and well-known companies with a fairly high credit rating.
Five main methods sales and purchases outside the stock exchange.
1. underwriting, which is a guaranteed issue.
2. "public method", the essence of which is the free offer of bonds on the securities market
3. direct or partial placement, when the corporation finds suitable buyers who take over the purchase of the loan.
4. competitive bidding in the nature of an auction.
5. "new placement technology", the essence of which is that corporations avoid the mediation of investment banks, brokerage firms when placing new issues of securities.
Control questions
1. The main centers of the international securities market.
2. What are the features of the issue and circulation of securities in the US?
3. What are the features of the issue and circulation of securities in the UK?
4. What are the features of the issue and circulation of securities in Japan?
5. What are the features of the issue and circulation of securities in France?
6. What are the features of the issue and circulation of securities in Germany?
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