See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/5222165

The Eurobond Market: Its Significance For International Financial

Managements*

Article  in  Journal of International Business Studies · March 1970

DOI: 10.1057/palgrave.jibs.8490718 · Source: RePEc

CITATION READS

1 1,047

1 author:

Günter Dufey
University of Michigan
54 PUBLICATIONS   570 CITATIONS   

SEE PROFILE

Some of the authors of this publication are also working on these related projects:

1) Internationalization of RMB and 2) Possible EU Counter Measures against US Sanctions View project

All content following this page was uploaded by Günter Dufey on 03 September 2014.

The user has requested enhancement of the downloaded file.

 THE EUROBOND MARKET:
ITS SIGNIFICANCE FOR
INTERNATIONAL FINANCIAL
MANAGEMENTS*
GUNTER DUFEY

The availability of more alternatives in the decision making process

is one of the most important distinguishing characteristics between the
management function in an international business enterprise' and the
management of a firm which operates strictly within national confines.
The choice among additional alternatives permits the firm to achieve a
greater degree of maximization. It is true, the road to the realization of
such alternatives is marred by obstacles and pitfalls, the study of which
is a major concern of our academic specialty, International Business.
However, while one recognizes the importance of analyzing these
difficulties, at the same time one must not overlook the tremendous
opportunities which the choice of alternatives presents for the
multinational company.
The corporation which operates in many different markets-with
varying labor conditions, unfilled demands, tax provisions, interest rates
and borrowing terms, possibilities for the application of already
developed techniques and technologies-finds its profit opportunities
multiplying. The successful exploitation of differential conditions is the
raison d'etre of the multinational corporation.
International financial management is no exception in this respect.

* Much of the material in this paper is based on two prior publications by the author:
The Eurobond Market-Function and Future, International Business Series No. 7, Studies
in Finance, Graduate School of Business Administration, University of Washington,
Seattle, 1969 and Relative Yield Variability In The Eurobond Market-A Pilot Study,
C.R.I.D.E., Universit'Catholique de Louvain, Belgium, 1969.
1. The terms international business enterprise, international corporation, multinational
company, etc. will be used synonymously. They denote a business firm which operates
simultaneously in different political, legal, social, and cultural environments.

65

Palgrave Macmillan Journals

is collaborating with JSTOR to digitize, preserve, and extend access to
Journal of International Business Studies ®
www.jstor.org
This paper is concerned with a relatively new alternative source of long
term capital that a multinational corporation can tap for world-wide
expansion. In this respect a brief survey of the available alternatives may
clarify the concept of the Eurobond market. Nowadays the treasurer of
a multinational corporation can clearly distinguish three alternative
capital markets in which it is possible to raise long-term debt capital
through the issue of new securities: first, there is the domestic capital
market of the parent company; second, the national capital market of
another country; third, a market which is foreign to both the borrower
and the investors.2

A Market Definition

Conceptually, the domestic market does not pose any difficulties.

However, when considerations of cost, availability, or foreign exchange
induce a corporation to raise funds in the capital market of a country
other than its own, it will frequently find itself frustrated in its efforts
because the access to national markets is often blocked by direct
government control or effective underwriter cartels. In this case the
borrower today can turn to a capital market which is beyond his own
national jurisdiction and that of (most) investors and thereby escapes
restrictions. This market is what is what we have come to know as the
Eurobond market. A typical example of a Eurobond transaction would
be the issue of dollar-denominated debentures by a Dutch corporation,
managed by a consortium of British merchant bankers, a large Dutch
bank and the overseas affiliate of an American investment banking
house, whereby a portion of the issue would be placed, say, with French
investors who maintain investment accounts with Geneva banks.
It must be pointed out that this relatively clear conceptual
delineation of capital markets sometimes becomes blurred, especially
from the investors' standpoint, in regard to the distinction between
Eurobonds and foreign securities issued in national markets. But, as will
later be shown in some detail, subtle distinctions in terms of taxation,
regulation, issuing techniques and similar factors distinguish the
Eurobond market from national markets for foreign securities. The New
York and Swiss foreign bond markets are probably the best known

2. Together, the latter two alternatives are normally called "international capital
market," which has traditionally been defined as "a market in which investors deal in
securities that represent foreign assets; i.e., for them the final claim on the borrower is
almost always to be made outside the legal jurisdiction of the security holder." However,
this distinction has legalistic significance only and is not important for corporate financial
decision making.

66
examples of such national markets for foreign securities. A difference in
price behavior is the essential criterion for the distinction.

The Early Years

Mid 1963 is normally considered the bench-mark for the beginning
of the Eurobond market, although certain security issues such as the
issue by Petrofina in 1959 would have qualified for the designation
Eurobond. Such issues, however, were so rare that the term market was
surely inappropriate. From the recognized starting date to the end of
1969 the equivalent of approximately $12 billion in long term funds was
raised in this Eurobond market. The market showed a phenomenal
growth rate, although it was rather uneven.3
In the beginning, the market was dominated by issues from public
or quasi-public borrowers. From 1965 on, private issuers, which for the
most part would qualify as multinational business firms, were prevalent.
As a matter of fact, over the past 4 years the proportion of funds raised
by this category of borrowers consistently averaged between 75 and 85
percent.4 It is interesting to note that in most domestic capital markets
this proportion is reversed. There, corporate debt issues must compete
with those of public entities which receive preferential treatment in a
variety of ways.5
U.S. multinational companies are the most important class of
borrowers in the Eurobond market. During the period from 1965
through 1967 their proportion of new issues was between 30 and 40 per-
cent; this increased to 60 percent in 1968, although it is expected to
revert to the earlier level for 1969. Some European critics have
maintained that this market was pre-empted by the flood of U.S.
corporate issues, but there is no evidence to support any contention of
institutionalized discrimination in the Eurobond market. Almost all
large European companies with multinational operations have raised
funds in this market. If, in any given instance, such corporations run
into more difficulties than their American competitors, these problems
are to a large extent of their own making. Frequently, their profitability
is lower than that of their American competitors; they are more

3. See Appendix Table 1.

4. Appendix Table 2.
5. For data see OECD Committee for Invisible Transactions, Capital Market
Study- General Report, Organization for Economic Cooperation and Development, Paris,
1967, p.169.

67
restricted in issuing equity linked securities and their standards of
financial disclosure are no match.6
It is difficult to ascertain quantitatively the importance of the
Eurobond market for the growth of overseas expansion by international
corporations. To the extent that data for U.S. corporations are
representative of the total situation, funding in the Eurobond market is
very significant. In 1968 and 1969 U.S. corporate Eurobond issues were
equal to approximately 25 percent and 10 percent respectively of total
expenditures for plant and equipment by the foreign affiliates of these
corporations.7 This data is particularly significant in view of the fact
that interest rates in the Eurobond market during these two years were
about the same as in the U.S. market.

Some Relevant Questions

Now that we have reviewed some of the broader perspectives of the
market, let me come to some specific questions which financial
management of a multinational corporation may ask about the
Eurobond market.
First, will this alternative remain available, or is it just a passing
phenomenon, since it only came into existence as a result of exceptional
circumstances?
A functioning capital market demands two fundamental
requirements, an economic rationale and an efficient institutional
framework. Historically, the Eubobond market evolved at a relatively
late stage in the development of the post-war international financial
system, the beginning of which dates back to the Bretton Woods
Agreement. Capital flows were largely limited to intergovernmental
transfers in the late 1940's, and it was not until the beginning of the next
decade that a slow revival of private international long-term lending and
borrowing took place; the final breakthrough occurred with the return
to at least partial convertibility of major European currencies. Currency
convertibility, however, was not a sufficient condition for complete
freedom of international capital market transactions in Europe.
European markets remained fragmented, even after attempts to integrate
other areas of economic activity were successful. The lack of integration,
structural weaknesses, and the use of capital markets as a major tool in
6. Aggregate comparative data on the volume of new issues of United States and non-
U.S. corporations must be interpreted with considerable care. The classification of non-
U.S. borrowers into private corporations and government institutions is a very fluid one.
See Appendix Table 3.
7. Appendix, Table 4.

68
achieving the objectives of national planning schemes resulted in
relatively tight controls on security issues by foreign borrowers. These
controls stood in contrast to the relative freedom enjoyed by investors
who intended to purchase foreign securities. This asymmetry of controls
is the fundamental reason for the birth of the Eurobond market.
The major reason why this economic rationale did not lead to the
development of the institutional framework of the Eurobond market
before 1963 was the vigorous competiton provided by the New York
foreign bond market. It took the announcement of the Interest
Equalization Tax (IET) in the United States, which effectively closed the
New York foreign bond market to borrowers from developed countries,
to bring about the institutional framework of the new Eurobond market.
This market scene became a very viable alternative for many borrowers,
who, for one reason or another, were unable to obtain long-term capital
under acceptable conditions in their domestic markets. Therefore it is
possible to say that the IET triggered the Eurobond market. However,
it is not the underlying cause. The same holds true for another reason
sometimes cited as a cause of the development of the new market,
namely the restriction on capital outflows from the U.S. through the
originally voluntary and subsequently mandatory Restraint Programs
and related measures. What those measures did for the Eurobond
market was to supply securities which attracted new sources of funds and
strengthened the institutional framework. It is significant too, that
private European corporations entered the market soon after American
corporate Eurobonds had become popular with investors.
Finally, German balance of payment measures largely explain the
developments in the DM-dominated part of the Eurobond market. From
1958 through 1963, foreigners had purchased large quantities of high
yielding German fixed interest securities. To prevent the ever-increasing
inflows of foreign funds, a 25 percent yield tax was levied on interest
payments on German domestic bonds to foreign bondholders. This tax
led foreign investors to sell off German bonds and purchase DM bonds
issued by foreign borrowers which were, of course, exempted from the
tax. The result was that yields of domestic and foreign DM bonds moved
in opposite directions, whereby those for DM bonds issued by foreign
borrowers fell in line with other Eurobonds. This decrease of interest
cost, in turn, led to strong issue activity in DM denominated bonds in
the Eurobond market. Even German companies found it advantageous
at times to issue such DM bonds through foreign financial subsidiaries.
It is my considered opinion that of all these factors the only one
vital to the future existence of the Eurobond market is the continued

69
imbalance of controls. For the foreseeable future, the liberalization of
foreign issues in European capital markets will remain an unattainable
ideal. The structural deficiencies of capital markets, ideological
convictions regarding the role of government in capital markets and
historically ingrained tendencies to maintain sovereignty in monetary,
fiscal and other economic matters render any liberalization extremely
unlikely. It is true, from time to time restrictions in individual capital
markets will be loosened, especially if a capital outflow is desired for
reasons of internal economic policy. Actually, the growth of the
Eubobond market serves to perpetuate these controls. As the market
expands, capital exports by investors tend to create the very phenomenon
which the controls are aimed at preventing. Economically, there is no
difference between a foreign borrower placing a security issue in a
national market and investors transferring funds abroad to purchase
foreign securities. However, from the standpoint of political expediency,
the access of foreign issuers can be curtailed much more easily than the
activities of investors. Impediments regarding the latter involve currency
restrictions which are difficult to enforce and are accompanied by well-
known, undesirable side effects.
None of the other factors are crucial to the continued existence of
the Eurobond market. A reversal of German policy as we see it right
now would certainly have some effect on the issue, volume and interest
rates of DM denominated Eurobonds, but this is only a relatively small
part of the market. Likewise, the removal of restrictions on U.S.
corporations and financial institutions might affect the volume of new
issues in the Eurobond market. The size and direction of this effect
depends mainly upon relative interest rates and foreign exchange
considerations, which will be analyzed later. But this event would not
lead to the demise of the Eurobond market. The treasurer of a U.S.
corporation, for example, will continue to find this alternative available
and consider it in his decision making.
There is serious doubt as to whether the New York foreign bond
market would replace the Eurobond market if the IET were suspended.
From the standpoint of a borrower, a non-U.S. corporation, the
following considerations come to mind: first, there are no formal
requirements in the Eurobond market. In contrast, compliance with SEC
regulations in the New York foreign bond market is not only costly but
also effectively excludes some categories of foreign borrowers. Even
before the imposition of the IET private non-U.S. corporations ran into
almost insurmountable problems trying to raise funds in the New York
market through a public issue of securities. Second, for these non-U.S.

70
borrowers the flotation costs are likely to be less in the Eurobond
market, if for no other reason than the larger number of competing
issuing houses and investment bankers. Third, the Eurobond market
provides an unmatched flexibility in terms of currencies for use as
denominators. In the New York foreign bond market there is no
alternative to the U.S. dollar.
Investors' considerations will be deferred until later when interest
rates are discussed. However, with the flow of U.S. funds unrestricted
by the IET, it is hard to conceive of an interest differential in favor of
the New York foreign bond market. Furthermore, in every national
market there is always the possibility of adverse government
intervention. Investors will undoubtedly remember the effects of such
measures as the introduction of the IET and the German coupon tax on
bond prices in the respective national foreign bond markets.

The Future of the Market

Recent reforms in the international monetary system lead to some
interesting speculations about the future of the market. It is usually
claimed that a system of flexible exchange rates would result in a virtual
standstill of international capital flows by way of long-term borrowing
and lending through fixed interest instruments. However, an argument
can be made that, if anything, the Eurobond market may survive such
a change, because of its freedom in the choice of currencies. The
possibility of a capital market based on currency options or constructs
similar to the European Unit of Account which have been used from
time to time in the Eurobond market may well prove very feasible.
By such reasoning, financial management can conclude that the
Eurobond market is well worth consideration as an alternative for the
foreseeable future.
For some time there has been speculation that the Eurobond market
could develop into a market for equity issues. During 1969, there have
been indications that this would happen.8 This observer hesitates to

8. In February of 1969 Pioneer Electronic Corporation of Japan floated three million

ordinary shares represented by Curacao Depository Receipts, worth a total of $6 million.
In June, Hunter Douglas raised $13.5 million Canadian Dollars of which almost half was
issued in form of CDR's. One month later Hayakawa Electric Company of Japan floated
500,000 ordinary shares represented by London Depository Receipts worth $12 million.
This issue was followed by one of Olympic Optical Company of Japan and Sanyo Electric
Company which issued ordinary shares in the form of London and Curacao Depository
Receipts respectively. See "Fashion in Financing: Euroequities" Business International,
September 26, 1969.

71
interpret this issuing activity as an enlargement of the Eurobond market
into an equity market for fundamental reasons. More than just a new,
though undoubtedly interesting, issue technique is required. One of the
basic requirements of a market is at least a potential for the development
of a separate price. It appears that these equity issues in the form of
depository receipts are unlikely to develop prices which are different
from those of the underlying shares. The same factors which influence
the valuation of the shares will influence the pricing of those shares
issued in the form of depository receipts. These remarks should not
detract from the significance of a new development. However, not
everything that is new and interesting in international capital and money
markets should be labeled "Euro." The confusion is great enough as it
is.
A second question which financial management might ask is, "HFow
reliable is the flow of funds into this market, especially with respect to
possible restrictions by various governments or other institutions?"
Recent years have seen some temporary efforts to subject borrowers
in the market to a formal queuing system in order to smooth the flow
of new issues. Such a waiting line is operated in most national markets,
usually by public authorities, but has never been implemented in the
Eurobond market. The number of issuing houses in this market is just
too large, and too culturally diversified; the British system of "old boy"
networks and gentlemanly competition is not universally accepted.
The attitudes of governments toward the Eurobond market are very
ambiguous and tend to shift rapidly with changing economic conditions.
It is true that the existence of the Eurobond market restricts the degree
of freedom of an independent capital market policy by providing real
alternatives for both borrowers and investors. On the other hand, in
principle, governments are not interested in the transactions of third
country residents, which are typical of the Eurobond market. On the
contrary, most welcome such entrepat business as a source of foreign
exchange earnings. Even if an individual government attempted to
interfere unilaterally, the market activities would simply shift elsewhere,
since they are not dependent upon the institutions of one particular
country. Furthermore, if a government intends to maintain convertibility
of its currency, it is virtually impossible to prevent investors from
purchasing foreign securities. In any case, third country accounts by
investors and multinational operations of corporations very much limit
the effectiveness of such controls. The supply of funds to the Eurobond
market is drawn from individual national markets in varying
proportions at different points in time. This could only be halted should

72
no less than an identity of specific interests happen to occur among all
national governments involved, which is impossible under present
conditions. Therefore, as long as the borrowers offer the right terms,
funds will doubtless be forthcoming.
In this respect, multinational corporate borrowers in the Eurobond
market have a distinct advantage over other types of borrowers, because
they have more flexibility in tailoring the terms of their new issues to
current investor needs. The relative freedom of choice of currency or
artificial currency constructs in which securities can be denominated is
particularly important. Much has been made of the dominance of the
dollar as the currency of denomination. There are two factors which
have contributed to its importance in the past and will continue to do
so. The first is the transaction demand for the U.S. dollar in all
international dealings. There is a second and probably more influential
factor. The dollar is less stable than some currencies, though more stable
than many others in terms of international purchasing power. Since one
of the attributes of a good denominator of long term financial claims is
the equitable distribution of exchange risks between lenders and
borrowers, the dollar is a very suitable standard.
Although in the past, other currencies, currency options and
currency constructs have played a relatively minor role in the market,
the possibility of their use as alternatives to the dollar is significant in
insuring a continuous flow of funds to the market. At least one central
bank has objected strenuously to the use of its currency in the market,
but with changing economic conditions central banks may not feel
obliged, to continue their opposition, or even capable of doing so.
The third question concerning the Eurobond market has possibly
the most practical significance from the viewpoint of international
financial management: what about the level and behavior of interest
rates? The planning of refunding operations and the determination of
call features are the most obvious financial decisions which are based on
the answer9to this question.
The interest rates for corporate bonds in the domestic U.S. market
are the anchor for the Eurobond rate structure. Yields on Eurobonds can
be either higher or lower than domestic rates in the U.S. the lower limit

9. The following presentation on Eurobond interest rates is restricted to basic outlines

of the issue. No pretenses are being made that this would come anywhere near an analysis
of international interest rate relationships. Particularly, national interest rates are
considered to be independent variables, determined exclusively by internal factors. This
assumption can only be defined in terms of space and time limitations, which forces to
concentrate in the analysis of the most powerful links only.

73
is determined by the effective withholding tax rate,'1 which must be paid
by foreign investors purchasing U.S. domestic securities. In practice,
however, there are factors at work which prevent the Eurobond rates
from falling far below U.S. domestic bond rates. For one, the demand
by U.S. corporations increases when Eurobond rates fall below their
domestic rates-with or without the Restraint Program. Also, in periods
of tight credit in the United States, Eurobond rates tend to be kept very
close to the equivalent U.S. rates through the medium of the Eurodollar
market. This connection is made mainly through the operations of
foreign branches of U.S. commercial banks. The determinants and
volume of U.S. bank borrowing in the Eurodollar market has been well
publicized and does not need further elaboration here. In turn, the link
between the Eurobond market and the Eurodollar market is not
established as is sometimes erroneously maintained, because Eurobonds
are funded with Eurodollars. The linkage between the two markets
comes about when each provides an alternative to the other. Investors
will switch from one investment medium to the other whenever the
interest rate differential and expectations of interest rate changes warrant
such action. More important, borrowers frequently raise funds in the
Eurobond market in order to consolidate their short-term Eurodollar
liabilities, or they will invest in the Eurodollar market proceeds from
Eurobond issues which are temporarily not needed.
Again in theory, the upper limit for Eurobond rates is equal to the
U.S. domestic rates plus an interest rate differential determined by the
IET. The actual level that Eurobond interest rates attain once they are
above U.S. rates is a function of the demand by U.S. corporations for
long-term funds to accommodate overseas expansion plans, and the level
of interest rates in the markets of other major countries. The latter
factor determines the intensity of the demand for funds which is brought
to bear on the Eurobond market by non-U.S. borrowers. Most
important, this factor regulates also the volume of funds flowing from
national markets into the Eurobond market. All this emphasizes the
significance of the relationship between capital markets outside the
United States and the Eurobond market. The flow of funds from
national markets to the Eurobond market, or any other foreign market
for that matter, is determined by the following factors: (1) the amount
of investible savings; (2) interest rate differentials, to be adjusted for
different tax assessments; (3) anticipated changes in exchange rates; (4)

10. The standard rate is 30 percent but is modified through double taxation treaties with
many countries.

74
the desire of investors to reduce portfolio risk through diversification as
to currencies, interest rate fluctuations, and as to the jurisdiction under
which wealth is held. Finally, there is the influence of present and
expected administrative measures such as foreign exchange regulation
and specific restrictions on portfolio decisions of institutional investors.
In view of these general considerations, it is safe to assume that the
Eurobond market tends to be a closer alternative to investment in
domestic securities than the capital markets of other countries. Tax
factors are some of the prime reasons. Almost all countries levy source
or withholding taxes on interest and dividends paid to foreign investors.
Although these taxes can usually be charged off by the investor against
the amount of income tax he owes in his country of residence, this is
very cumbersome, to say the least. Eurobonds are always issued in such
a way that interest is paid free of withholding tax. Since they are also
issued in bearer form, there are additional means to defer or avoid
income taxes.
The freedom from taxation-present and future, the unmatched
possibilities for diversification as to currencies and borrowers, and the
generally greater assurance of the absence of interference by national
governments are characteristics of the Eurobond market which appeal
to investors. The organization of secondary trading for Eurobonds has
often been designated as the Achilles Heel of the market. Although
technical problems still abound, experienced dealers voice the opinion
that the market compares favorably with national European capital
markets and the Canadian bond market." The institution of a central
clearing system, e.g., Euro-Clear, and the growth of international
brokerage organizations, such'as Bondtrade and Eutotrading will add to
the attractiveness of this market for investors.
A detailed analysis of the inter-relationship through the flow of
funds between individual national markets and the Eurobond market
would go beyond the scope of this paper.'2 However, studies of possible
connections between the market under study and certain capital markets
of Continental Europe show that the flows of funds between the
Eurobond market and these alternative markets respond to changes in
yield differentials. The flow of funds during 1965 from the Italian
market into the Eurobond market and the flow of German funds to the
Eurobond market from the end of 1967 onward are the most outstanding

11. N. M. Rothschild & Sons et al. The Euroband Market, London, February 1969,
p. 19.
12. For details, see Gunter Dufey, The Euroband Market-Function and Future op. cit.
Chapter IV.

75
examples of this tendency.'3 The nature of the interaction between
national capital markets and the Eurobond market leads to an
interesting hypothesis regarding the volatility of yields in the Eurobond
market. Interest rates in national markets are determined largely by
endogenous variables, i.e., mainly the monetary policy of the national
authoriteis. Given that investible funds flow from many different capital
markets into the Eurobond market in response to interest rate changes;
given further an ever-present demand in this market from a widely varied
group of borrowers, it can be expected that yields for new issues in the
Eurobond market are more stable than those in national markets for
foreign bonds."4This hypothesis was tested for the period of June 1964-
July 1967. It would go too far to discuss the methodology used and the
nature of the data.'5 The results of this pilot study are not absolutely
conclusive; however, the evidence derived therefrom tends to support the
hypothesis to some extent.
In lieu of a formal conclusion, let me mention the directions in
which further research efforts in the area of international capital markets
might be channeled. One such direction which comes to mind concerns
the problem of issuing terms of Eurobonds. There is need for a thorough
and comprehensive analysis which relates the terms of these issues to
both the conditions of the issuing corporation as well as to the
environmental conditions at the time of issue. Further, there should be
an inquiry into the problem of equity linked security issues by non-U.S.
multinational corporations. Are legal restrictions in the country of the
issuer really the decisive constraint?
Furthermore, as regards investor motivations and actions in the
Eurobond market more needs to be done. It is true, interview techniques
will not render meanginful results, but quantitative analysis of yield
patterns may promise some tentative insights. Finally, there is a host of
questions to be studied in relation to the influence of changes in the
13. Of course, the intensity of these flows varies greatly. Factors which render the
relationship between those markets less than perfect include among other things deliberate
government policies ranging from discouraging financial institutions to advertise
Eurobonds, over various tax measures, to stringent currency controls. Also, imperfect
information of investors and expectations of exchange rates changes constitute causes for
remaining yield differences.
14. Foreign bond markets are closely integrated with the domestic capital markets of
their host country; they essentially are subject to the same regulations, market forces,
investor habits, and institutional arrangements which govern the domestic markets.
15. For details see Gunter Dufey, Relative Yield Variability In The Eurobond
Market-A Pilot Study op. cit.

76
international monetary system on international capital and money
markets. The challenge to international financial management posed by
a rapidly changing environment makes it a fascinating field of study and
research.

77
 Appendix

TABLE1

OF GROSSISSUES OF FOREIGNSECURITIES
VOLUME
(In dollar million equivalent)

Year Eurobond Market

1963 150

1964 650

1965 1,050

1966 1,150

1967 2,000

1968 3,700

1969 3,000 *

Total 11,700

*Preliminary

Sources: OECDCommittee for Invisible Transactions, Capital Market Study--

Statistical Annex, Organization for Economic Cooperation and Development, Paris,
March 1967; GUnther Brbker, "Die Markte fUr Auslandsanleihen im Jahre 1967-1968,"
Bank-Betrieb, July-August, 1968, p. 186; and EEC Commission, The Development of
a European Capital Market, Report of a Group of Experts under Claudio Segr6,
Brussels, November 1966, p. 360. Morgan Guaranty Trust Company, Economist's
Department, World Financial Markets, Various Issues. All figures are rounded
and give approximate magnitudes only.

78
 TABLE 2

EUROBONDS: CORPORATE VS. PUBLIC ISSUES

(In dollar million equivalent)

Eurobonds Corporate Public

Year Total Total Percent Total Percent

1963 150 10 7 140 93

1964 650 130 20 520 80

1965 1,050 790 75 260 25

1966 1,150 940 82 210 18

1967 2,000 1,580 79 420 21

1968 3,700 3,160 85 540 15

1969 3,000 * 2,360 79 690 * 21 *

Total 11,700 8,970 2,780

*"Preliminary

Sources: N. M. Rothschild and Sons, The Eurobond Market, February, 1969,

p. 7; Morgan Guaranty Trust Company, Economist's Department, World Financial
Markets, Various Issues. All figures are rounded and give approximate magnitudes
only.

79
 TABLE 3

CORPORATE EUROBONDS: U.S. VS. NON-U.S. CORPORATIONS

(In dollar million equivalent)

Corporate U. S. Non-U.S.
Eurobond Corporations Corporations
Year Total Total Percent Total Percent

1963 10--

1964 130

1965 790 360 46 430 54

1966 940 450 48 490 52

1967 1,580 560 35 1,020 65

1968 3,160 2,170 69 990 31

1969 2,360 * 1,050 ; 44 * 1,310 * 56 *

Total
(1965-69) 8,970 4,590 4,240

*Preliminary

Source: Morgan Guaranty Trust Company, Economist's Department, World Financial

Markets, Various Issues. All figures are rounded and give approximate magnitudes
only.

80
 TABLE 4

U.S. FOREIGN INVESTMENT EXPENDITURES

VS.

U.S. EUROBOND ISSUES

(In dollar million equivalent)

Plant and Equipment U. S. Corporate

Expenditures By Foreign Eurobond
Year Affiliates of U.S. Corporations Issues

1965 7,440 360

1966 8,640 450

1967 9,270 560

1968 9,350 2,170

1969 11,800 * 1,050 *

*Preliminary

Source: U.S. Department of Commerce, Survey of Current Business, September,

1969, p. 18. All figures are rounded and give approximate magnitudes only.

81

View publication stats