The Role of Foreign Bond Issuance: The Case of Australia

Publisher:
Blackwell Publishing Ltd
Publication Type:
Journal Article
Citation:
The Australian Economic Review, 2011, 44 (1), pp. 36 - 50
Issue Date:
2011-01
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We examined the recent development of the foreign bondtermed Kangaroo bondmarket in Australia. Overwhelmingly, issuers in this market are of high credit quality and comprise sovereign, supranational and major international financial institutions. Local institutional investors have a preference for simple, fixedrate pricing structures, with foreign issuers reliant upon converting their Australian dollardenominated bond proceeds into the currency and coupon type of choice using cross-currency swaps. The Kangaroo bond issuers provide a natural counterparty to Australian residents issuing in foreign currency in offshore markets, where cross-currency swaps allow them to easily convert their proceeds into Australian dollars.
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