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The yen is the official currency of Japan. It is the third-most traded currency in the foreign exchange market, after the United States dollar and the euro. It is also widely used as a third reserve currency after the US dollar and the euro.
The renminbi is the official currency of the People's Republic of China. It is the world's 5th most traded currency as of April 2022.
A government bond or sovereign bond is a form of bond issued by a government to support public spending. It generally includes a commitment to pay periodic interest, called coupon payments, and to repay the face value on the maturity date.
Currency substitution is the use of a foreign currency in parallel to or instead of a domestic currency.
The Hong Kong dollar is the official currency of the Hong Kong Special Administrative Region. It is subdivided into 100 cents or 1000 mils. The Hong Kong Monetary Authority is the monetary authority of Hong Kong and the Hong Kong dollar.
Eurocurrency is currency held on deposit outside its home market, i.e., held in banks located outside of the country which issues the currency. For example, a deposit of US dollars held in a bank in London, would be considered eurocurrency, as the US dollar is deposited outside of its home market.
A eurobond is an international bond that is denominated in a currency not native to the country where it is issued. They are also called external bonds. They are usually categorised according to the currency in which they are issued: eurodollar, euroyen, and so on. The name became somewhat misleading with the advent of the euro currency in 1999; eurobonds were created in the 1960s, before the euro existed, and thus the etymology is to "European bonds" rather than "bonds denominated in the Euro currency".
The yuan is the base unit of a number of former and present-day currencies in Chinese.
The foreign exchange reserves of China are the state of foreign exchange reserves held by the People's Republic of China, comprising cash, bank deposits, bonds, and other financial assets denominated in currencies other than China's national currency. As of January 2024, China's foreign exchange reserves totaled US$3.22 trillion, which is the highest foreign exchange reserves of any country.
A Panda bond is a Chinese renminbi-denominated bond from a non-Chinese issuer, sold in the People's Republic of China. The first two Panda bonds were issued in October 2005 on the same day by the International Finance Corporation and the Asian Development Bank. Their terms were 1.13 billion yuan of 10-year bonds at a 3.4% yield and 1 billion yuan of 10-year bonds at a 3.34% yield. The Chinese government had been negotiating for several years about implementation details before permitting the sale of such bonds; they had been concerned about the possible effects on their currency peg. Eventually, it was agreed that funds raised from sales of Panda bonds would have to remain in China; issuers would not be permitted to repatriate such funds.
A Kimchi bond is a non-won-denominated financial bond issued in the South Korean market. The name refers to kimchi, a Korean side dish. Woori Bank, which is credited with coining the term, defines it as solely referring to bonds from foreign issuers, a definition echoed by the Ministry of Finance and Economy. However, in practice, the term is also used to refer to non-won-denominated bond issuance by domestic entities. Deutsche Bank credits itself as having executed the first kimchi bond transaction, a US$100 million two-year floating rate note sold by South Korean company SK Global, but the first foreign company to sell non-won-denominated bonds in the South Korean market was Bear Stearns. Although foreign firms had long been permitted to issue won-denominated bonds, typically referred to as Arirang bonds, permission for them to issue foreign currency-denominated bonds was slower in coming. Permission was finally granted due to the strength of the won in 2005.
An Arirang bond is a won-denominated bond issued by a foreign entity in South Korea. The name refers to "Arirang," a Korean folk song. The market for Arirang bonds is extremely small, constituting less than 0.2% of corporate bond issuance in South Korea. The Asian Development Bank was the first to issue Arirang bonds, with a 1995 issue of ₩80 billion worth of seven-year bonds.
An Uridashi bond is a secondary offering of bonds outside Japan. They can be denominated in Yen or issued in a foreign currency. These bonds are sold to Japanese household investors. An Uridashi bond is normally issued in high-yielding currencies such as New Zealand Dollars or Australian Dollars in order to give the investor a higher return than the historically low domestic interest rate in Japan.
A samurai bond is a yen-denominated bond issued in Tokyo by non-Japanese companies, and is subject to Japanese regulations. These bonds provide the issuer with an access to Japanese capital, which can be used for local investments or for financing operations outside Japan. Foreign borrowers may want to issue in Samurai market to hedge against foreign currency exchange risk. Another intention may be simultaneously exchanging the issue into another currency, in order to take advantage of lower costs. Lower costs may result from investor preferences that differ across segmented markets or from temporary market conditions that differentially affect the swaps and bond markets.
The United States dollar was established as the world's foremost reserve currency by the Bretton Woods Agreement of 1944. It claimed this status from sterling after the devastation of two world wars and the massive spending of the United Kingdom's gold reserves. Despite all links to gold being severed in 1971, the dollar continues to be the world's foremost reserve currency. Furthermore, the Bretton Woods Agreement also set up the global post-war monetary system by setting up rules, institutions and procedures for conducting international trade and accessing the global capital markets using the US dollar.
Dim sum bonds are bonds issued outside of China but denominated in Chinese renminbi, rather than the local currency. They are named after dim sum, a popular style of cuisine in southern China.
Since the late-2000s, the People's Republic of China (PRC) has sought to internationalize its official currency, the Renminbi (RMB). RMB internationalization accelerated in 2009 when China established the dim sum bond market and expanded Cross-Border Trade RMB Settlement Pilot Project, which helps establish pools of offshore RMB liquidity. The RMB was the 8th-most-traded currency in the world in 2013 and the 7th-most-traded in early 2014. By the end of 2014, RMB ranked 5th as the most traded currency, according to SWIFT's report, at 2.2% of SWIFT payment behind JPY (2.7%), GBP (7.9%), EUR (28.3%) and USD (44.6%). In February 2015, RMB became the second most used currency for trade and services, and reached the ninth position in forex trading. The RMB Qualified Foreign Institutional Investor (RQFII) quotas were also extended to five other countries — the UK, Singapore, France, Korea, Germany, and Canada, each with the quotas of ¥80 billion except Canada and Singapore (¥50bn). Previously, only Hong Kong was allowed, with a ¥270 billion quota.
A Schengen bond is a bond denominated in offshore Renminbi, and more specifically refers to bonds listed on the Luxembourg Stock Exchange and issued by a Chinese company.
A Yankee Bond is a bond issued by a foreign entity, such as a bank or company, that is issued and traded in the United States and denominated in U.S. dollars. For instance, Company ABC is headquartered in France. ABC issues dollar bonds in the United States, the bonds are Yankee bonds. Yankee bonds are normally issued in tranches, a debt structure that divides the investment into portions. Typically each portion has a different level of risk, interest rates, and maturities. Investors buy Yankee bonds to access overseas firms. Yankee bonds are like other bonds. The borrower pays interest and principal. Yankee Bonds are administered by the Securities Act of 1933. Issuers register Yankee Bonds with the Securities and Exchange Commission (SEC) before offering them for sale.
Chinese-issued U.S. dollar bonds are dollar-denominated bond issued by Chinese financial institutions and corporations.
References
- ↑ "Eurodollar deposit". Archived from the original on 2008-12-26. Retrieved 2009-01-05.
- ↑ Memili, Ümit (2012). Baklava Bonds: Sweet Margins in Turkey. Evaluating Turkish Corporate Bonds in Local Currency. p. 117.
- ↑ no byline (2005-12-05). "Ninja loans may yet overtake samurais". The Standard. Archived from the original on 2007-09-29. Retrieved 2008-12-09.
- ↑ "Bulldog Bond Definition from Financial Times Lexicon". Archived from the original on 2018-11-16. Retrieved 2017-06-19.
- ↑ Batten, Jonathan A.; Peter G. Szilagyi (2006-04-19). "Developing Foreign Bond Markets: The Arirang Bond Experience in Korea" (PDF). IIS Discussion Papers (138). Retrieved 2007-07-06.
- ↑ Gwon, Yeong-seok (2006-05-24). "'김치본드' 내달 처음으로 선보인다 (Announcement: first 'Kimchi Bonds' next month)". The Hankyoreh. Retrieved 2007-07-06.
- ↑ Chung, Amber (2007-04-19). "BNP Paribas mulls second bond issue on offshore market". Taipei Times. Retrieved 2007-07-04.
- ↑ Areddy, James T. (2005-10-11). "Chinese Markets Take New Step With Panda Bond". The Wall Street Journal. Retrieved 2007-07-06.
- ↑ Stein, Peter (2010-11-01). "Dim Sum Bonds on the Menu for Foreign Investors". The Wall Street Journal. Retrieved 2010-11-01.
- ↑ "Charting the Growth of Kungfu Bonds" (PDF). Bloomberg LP. 12 June 2018. Retrieved 9 December 2018.
- ↑ Moura, Fabiola (2011-03-26). "Chile Expects More 'Huaso' Bond Sales in Coming Months, Larrain Says". Bloomberg.
- ↑ "Komodo Bonds". London Stock Exchange Group . Retrieved 16 February 2022.
- ↑ Dual currency bond, accessed 2012-06-08.