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International Bonds Market Essay

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The international Bonds markets is a platform whereby the flow of funds between the borrowers for long-run funds and long-term investors who supplies funds is facilitated. There are two main types of bonds that Shoprite can use the foreign bonds or the Eurobonds.
Foreign bonds can be defined as bonds that are issued by a global borrower and sold to investors in countries with currencies other than the currency in which the bond is denominated while Eurobonds are issued in a host country’s bonds market, in the host country’s currency, by a foreign borrower. This bond is subjected to the protocols enacted on all securities traded in the national market and sometimes to special regulations and disclosure requirements governing foreign …show more content…

For instance, if it is expanding to Asian countries, it may be wiser to issue bonds in Asian profitable bonds markets like Japan or Singapore but if it is expanding in European countries it may be more efficient for Shoprite to issue bonds in /European countries. This will facilitate the budgeting of funds inflows and outflows in the strategic expansion location. Moreover, Shoprite can attempt to issue bonds whereby it has to pay less interest rates to its investors till the maturity date. Shoprite currently offers an interest rate of 6.5% . Therefore, Shoprite may have a competitive advantage over Carrefour in Europe as it provides only 5.25% of coupon and AEON with 2.5 % of interest rate. However, Shoprite may have problem raising more capital with Walmart, a direct rival issuing bonds with a return of 6.5% too.
Advantages
There are numerous advantages of being the “borrowers” in the international bonds market. Firstly, the size and the depth of the international bonds market is much larger than Shoprite’s domestic market. Therefore, Shoprite can not only issue bonds of higher values but also more frequently in case the retailer needs additional funding to expand in the foreign markets.
Secondly, often the Eurobond market has less regulated than domestic markets and therefore a freer platform to raise capital. This freedom is due to the facts that Shoprite can bypass restrictions of domestic financing like official requirements authorization, queuing

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