FINANCINGININTERNATIONALMARKETS.pptVIP

Eurobonds with Currency Options Attached Attached to a Eurobond issue, a currency option is securitized as a tailor-made listed warrant. ? Advantages over standard currency options For Buyers: - Loophole: In some countries, rules prevent retail and institutional investors from buying currency options per se. - Smaller denominations or contract sizes - Longer exercise periods. For Issuers: - Adding a securitized option reduces the cost of the borrowing. Disadvantage for the issuer: It creates an exposure for itself. The issuer may choose to hedge this exposure. Example: Bioneth Engine