Question

Contrast foreign bonds and Eurobonds.

Discuss any benefits you can think of for a company to (a) cross-list its equity shares

Answer 1

1) A foreign bond is a bond issued by a foreign company in a country and the currency of that issue is the domestic currency of the country in which this is being issued. For example, say a German company is issuing a bond in US in dollar, this is a foreign bond. Euro bonds are those types of bond which are denominated in a particular currency but they are issued outside the domestic currency of that country. For example, Eurodollar bonds are dollar denominated bonds issued outside the US. Generally foreign bonds face lot of rules and regulation but Euro bonds does not face that much regulation.

2) Cross-listing of equity shares means that the company shares are listed on more than one stock exchange. For example, an Indian company is listed on NSE, Indian stock exchange but is also listed on the US stock market. There are some benefits of the cross-listing, the company stocks are traded in different time zones and it gives higher liquidity to the stock and It also gives the company to raise funds from a large set of investors rather than just one country. The listing of a company share on more than one stock exchange is often seen as a positive thing about the company and it often helps them in raising funds at lower rates.