Carrefour S.A. Case Write-up In order to finance its ongoing expansion, Carrefour decided to issue EUR750 million 10-year bond through the eurobond market. Investment banks, like Morgan Stanley and UBS-Warburg had suggested that instead of issuing the bond with EUR, Carrefour could borrow British sterling pounds this time by taking the advantage of a temporary borrowing opportunity in the currency. Carrefour also faced three other alternatives of issuance: the bond could be issued at a coupon rate of 5.25% in euro, 3.625% in Swiss francs, or 5.5% in USD.
There are several considerations that Carrefour should take when it evaluated which currency it should issue the EUR debt. According to relative PPP equation,
%ΔS(foreign …show more content…
(See details and calculation in Exhibit 2.) The last consideration of issuing the debt is markup of different currencies. The markup equals to the difference between the bond’s issuing coupon rates and inter-bank interest rates of 10-year bond of four currencies. The calculation has shown that British pounds has the lowest markup among other three currencies. (See Exhibit 3) This 0.001% markup would greatly reduce default rate of the debt and make the debt more secured, also attracts more investors.
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Todd Wates, now 28 years old, has been treated for Cystic Fibrosis (CF) since he was eight years old. He currently resides with his mother Sarah, and father Anthony, in a two-bedroom apartment close to the hospital where he receives treatment.
The Rose Company is building a new plant to reduce cost, improve the quality of products, and maintain competitive leadership by gaining a slight production advantage. The main obstacles to be overcome are the commissioning of a new plant, new methods and process, and administrative reporting issues. As the newly hired General Plant Manager, I plan to resolve these issues by insisting that all plant communications flow through me, instituting training for plant personnel and setting operational expectations.
It is necessary to determine when L was removed as director of SPG and SET to ascertain the validity of the plaintiffs’ appointment as administrators. To establish L’s time of removal, one must first conclude whether the decision at the meeting took effect immediately, or if the subsequent messages exchanged between M and L, and belated lodging with ASIC, suggest a later removal date.
The conditions for this alternative are very similar to alternative #2 in the aspect that the only thing that has changed is the condition for the collectability. If we decide to recognize the partial revenue of $15,000 on October 4, 2015, when the customer pays the remaining $15,000, collectability is assured 100 percent because all the payment has been paid. In
IASB (2009). IAS 21 The effects of Changes in Foreign Exchange Rates. Retrieved on November 7, 2011 from: http://ec.europa.eu/internal_market/accounting/docs/consolidated/ias21_en.p
Governments around the world issue debt to help finance their general operations, including current expenses such as wages for government employees, and investments in long-term assets such as infrastructure and education. As countries capital markets develop, an increasing number of sovereigns have been able to issue both external debts (denominated in hard currency, often the U.S. dollar) as well as local debt (issued in the sovereign’s own currency).
Du Pont's financial policy had always been based on maximization of financial flexibility. Taking to consideration the riskiness of Du Pont's businesses, its competitive position and profitability had declined in the last 20 years. Moreover, the firm is still forced to seek external financing each year for the next five years (1983-1987) due to the continued high level of capital expenditures which are considered non-deferrable to redress the causes of poor performance. In view of the importance and magnitude of the projected financing needs, the firm is concerned about how the cost and availability of debt
Diageo’s mixture of the short- and the long-term debt and the currencies can be a subject for concern: having 47% of the debt was raised via short-term commercial papers and thus exposing the company to the refinancing risk in case of the adverse changes in the interest rates. Currencies’ mixture of debt was also quite concerning: with the ca. 50% of operating profits
Stock Evaluation: According to our calculation: Tottenham will see a hike in its share price by 0.48% for every point increment and it can expect a 7 point increment per season which will result in a 3.35% hike in its share price.
U.S. Semiconductor, a semiconductor manufacturer decided to expand their business to UK market in 1980. Their new business plan needed specialized technical support facility in UK. In order to minimize the equity investment, they decided to fund their assets mostly with debt. As Semiconductor owned subsidiaries, which spread all over the world, they face great exchange risk. Besides, instead of building a production department in UK, Semiconductor kept producing their products domestically and delivered them to UK by plane. British firms also confronted exchange risk due to the difference between import costs and sales revenues. This case mainly involves the discussion on the method of debt funding.
The purpose of this analysis is to highlight how Carrefour has financed its growth over the last four years i.e. 1968 through 1971 with the help of the Statement of Sources and Uses (Exhibit 1). In addition, the financing needs for the projected growth of the company will be reported and analyzed briefly. For this purpose Pro-forma Income Statements (Exhibit 2) and Pro-forma Balance Sheets (Exhibit 3) have been prepared for the next four years (1972 through 1975).