Foreign-currency bonds: currency choice and the role of uncovered and covered interest parity

Arbeitspapier

Using count-data techniques, this paper studies the determinants of currency choice in the issuance of foreign-currency-denominated bonds. In particular, we investigate whether bond issuers choose their issuance currency in order to exploit the borrowing-cost savings associated with deviations from uncovered and covered interest parity. Our sample includes issuers from both the public sector and private sector. Our findings show that the choice of issuance currency is sensitive to deviations from uncovered interest parity but insensitive, in general, to deviations from covered interest parity. Furthermore, the influence of deviations from uncovered interest parity is stronger for financial issuers than for nonfinancial issuers.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ECB Working Paper ; No. 947

Classification and Topics

• Classification: Wirtschaft ; Foreign Exchange ; Financial Aspects of Economic Integration ; Information and Market Efficiency; Event Studies; Insider Trading ; International Financial Markets ; Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
• Subject: bonds ; currency choice ; foreign exchange ; interest-rate parity ; international debt securities ; Internationale Anleihe ; Währungsmanagement ; Zinsparität ; Internationaler Finanzmarkt ; Theorie ; Welt

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Habib, Maurizio Michael ; Joy, Mark
• Event: Veröffentlichung
• (who): European Central Bank (ECB)
• (where): Frankfurt a. M.
• (when): 2008

Further information

• Handle: http://hdl.handle.net/10419/153381
• Last update: 10.03.2025, 11:42 AM CET