Motivations for swap-covered foreign currency borrowing

Size: px
Start display at page:

Download "Motivations for swap-covered foreign currency borrowing"

Transcription

1 Motivations for swap-overed foreign urreny borrowing Anella Munro and Philip Wooldridge 1 1. Introdution Borrowing denominated in foreign urrenies soared during the s. 2 Gross issuane of foreign urreny bonds tripled between 2 and 7 to $2.4 trillion, and even in 8, during the international finanial risis, foreign urreny borrowing remained relatively high (Figure 1). Issuane in some previously non-internationalised urrenies, inluding a number of Asia-Paifi urrenies, inreased partiularly fast (Figure 2). Indeed, for many urrenies, issuane by non-residents outstripped the growth in issuane by residents, thereby expanding the presene of foreign issuers in the market (Figure 3). A puzzling aspet of this large volume of foreign urreny bonds is that many issuers immediately swap the funds raised into another urreny, typially their own loal urreny. In other words, issuers raise foreign urreny funding and simultaneously enter a urreny swap to pay interest in loal urreny and reeive interest in foreign urreny, thereby repliating the ash flows assoiated with a loal urreny bond. What motivates borrowers seeking loal urreny finaning to issue swap-overed foreign urreny bonds rather than tap the loal urreny market diretly? The finane literature fouses on operational inentives as the main explanation for why borrowers tap foreign urreny markets. Allayannis and Ofek (1) examine a sample of S&P5 non-finanial firms and find evidene that firms issue foreign urreny-denominated debt to hedge urreny exposures arising from foreign operations or foreign urreny inome. Kedia and Mozumdar (3) obtain similar results for foreign urreny debt issued in 1 major urrenies by large US firms. Gezy, Minton and Strand (1997) and Graham and Harvey (1) find that firms with greater growth opportunities and tighter finaning onstraints are more likely to use urreny derivatives, as well as those with foreign exhange exposure and eonomies of sale in hedging. Rising trade and investment flows undoubtedly ontributed to the inrease in foreign urreny bond issuane during the s. However, issuane rose faster than an be explained by suh flows alone. For example, foreign urreny issuane rose from about 1% of world exports in the late 199s to more than 14% in 6 7 (Figure 1). Moreover, non-finanial orporations, whih are the fous of most of the abovementioned empirial studies, are minor partiipants in foreign urreny bond markets. Non-finanial orporations aounted for less than 1% of foreign urreny bond issuane during the s. Finanial institutions are the largest borrowers in foreign urreny bond markets, followed by governments, and both are less likely than non-finanial orporations to have an operational 1 2 Senior Eonomists, Bank for International Settlements. We are grateful for omments from partiipants in seminars at the Bank for International Settlements, the Reserve Bank of Australia, and the Reserve Bank of New Zealand; for disussions with Fergus Edwards and Paul Daley; and for researh assistane from Clara Garia. The views expressed in this paper are those of the authors and do not neessarily reflet those of the Bank for International Settlements. Bonds are ategorised as foreign urreny bonds when denominated in a urreny different from that of the territory where the issuer prinipally resides and as loal urreny bonds when denominated in the same urreny as that of the territory where the issuer prinipally resides. In this paper, no distintion is made between onshore and offshore issuane. BIS Papers No

2 reason to borrow in foreign urreny. Finanial institutions and governments with no foreign operations or sales regularly seek to lower their finaning osts by engaging in opportunisti swap-overed borrowing (MBrady and Shill, 7). Furthermore, in the few ountries with omprehensive national data on derivatives positions, a substantial proportion of foreign urreny borrowing is evidently swapped into loal urreny. In Australia, lose to 85% of external debt liabilities denominated in foreign urrenies are hedged with finanial derivatives into Australian dollars (Beker et al, 5). In New Zealand, about 81% of foreign urreny liabilities are hedged into New Zealand dollars (Statistis New Zealand, 8). The literature on swap-overed interest parity indiates that prie differenes aross markets are atively arbitraged. In the most liquid markets, pries an adjust to new information without any trading taking plae and so are unlikely to deviate signifiantly from their no-arbitrage levels. In less liquid markets, pries are slower to adjust and, therefore, temporary arbitrage opportunities may explain some swap-overed borrowing. However, if temporary, then opportunities for arbitrage should deline over time. The growing partiipation of non-residents in loal urreny markets, shown in Figure 3, and the large volume of swap-overed borrowing in some well developed markets indiates that the fators that give rise to swap-overed borrowing may be persistent. Drawing on the literature on debt issuane, we onsider a range of market imperfetions and fritions that may result in persistent gains from raising loal urreny finaning indiretly, on a swap-overed basis, rather than diretly. Transations osts, market size, market inompleteness, information asymmetries and regulatory fritions all potentially ontribute to the attrativeness of swap-overed borrowing. We take these propositions to a large database on debt issuane, examining the harateristis of bonds issued by residents in foreign urreny and by non-residents in loal urreny, natural swap ounterparties with potentially omparative ost advantages. We find that the relative harateristis of resident and non-resident ounterparties issuane are onsistent, in terms of redit quality, maturity, oupon struture, with the impliations of many of the motivations onsidered. The ounterparties harateristis are signifiantly different in several respets, onsistent with some of the hypotheses put forward. While this paper has a finane fous, it is also relevant to the maroeonomi literature on finanial rises. Many past rises were exaerbated by urreny and maturity mismathes on firms or banks balane sheets. Countries vulnerability to suh mismathes is sometimes attributed to residents inability to borrow abroad in their own urreny ( international original sin, whih leads to urreny mismath) or to borrow long term in the domesti market ( domesti original sin, whih leads to maturity mismath). 3 Credible maroeonomi poliies that protet the value of debts denominated in loal urreny, suh as a ommitment to low inflation, fisal prudene and a transparent exhange rate poliy, are neessary if non-residents are to buy loal urreny debt. But sound maroeonomi poliy does not appear to be suffiient in some emerging markets. This paper looks in more detail at the miroeonomi level. Swap-overed borrowing may offer a way to overome urreny or maturity mismathes, through the use of foreign debt markets. However, it is not a panaea. Against any benefits must be weighed the risks and regulatory demands assoiated with a more omplex form of finaning, as well as the onsequenes for the development of loal apital markets. Moreover, if there are benefits to be exploited from swap-overed borrowing, they an only be realised if regulations, partiularly exhange ontrols, allow. Residents must be able to borrow in foreign urreny, non-residents in loal urreny, and both must be permitted to engage in urreny swaps. 3 The term original sin was first used by Eihengreen and Hausmann (1999). 146 BIS Papers No 52

3 The rest of the paper proeeds as follows. Setion 2 provides an overview of the size and struture of ross-urreny swap markets. Setion 3 explores potential motivations for swapovered foreign urreny borrowing, and Setion 4 takes the impliations of these motivations to the data on foreign urreny bond issuane. Setion 5 disusses the risks of swap-overed borrowing. The final setion onludes with poliy lessons and areas for future researh. 2. Curreny swap markets and international bond markets Swap-overed foreign urreny borrowing presumes the existene of a urreny swap market. Curreny swaps are over-the-ounter derivatives. They an be haraterised as an exhange of a loan in one urreny for a loan in another urreny. The prinipal amount is usually exhanged at both the initiation and termination of the swap, and interest payments are exhanged during its life. Interest an be paid at either a fixed or a floating rate. While plain vanilla urreny swaps take the form of fixed-for-floating rates, there are a bewildering variety of ways in whih urreny swaps an be strutured. Curreny swaps an be negotiated for any maturity, but they are typially used for medium- and long-term transations, out to several deades for some urrenies. 4 Curreny swaps were introdued in the 197s and their use has expanded enormously sine then. Aording to the BIS Triennial Central Bank Survey, the average daily turnover of urreny swaps rose from $3.8 billion in April 1995 to $31.5 billion in April 7 (Table 1). The nominal value of outstanding swaps rose from $2. trillion to $14.1 trillion over the same period. An important innovation in urreny swap markets was the shift in the 199s towards trading urreny basis swaps, in whih floating rate payments in one urreny are exhanged for floating rate payments in a different urreny. A urreny swap an thus be deomposed into a ombination of a ross-urreny basis swap and single-urreny interest rate swaps. Curreny basis swaps are typially quoted against US dollar Libor. A basis swap spread of x basis points indiates that a ounterparty wanting to swap US dollars for a foreign urreny loan must pay x basis points above the benhmark floating rate on foreign urreny funds in return for US dollar Libor. As shown in Figure 4, urreny basis swap spreads for many urrenies were positive over the 5 7 period and then turned negative in 8. 5 In the s, the trading of urreny swaps inreased notieably for many urrenies. Whereas in April 4 there were only seven urrenies in whih turnover exeeded $ million a day, in April 7 there were 15 urrenies with turnover above $ million, inluding the South Korean won, the South Afrian rand and the Hong Kong dollar. The development of urreny swap markets is losely related to the partiipation of non-residents in loal urreny markets and, no less important, the partiipation of residents in foreign urreny markets. By definition, the urreny exposures and preferenes of non-residents differ from those of residents. Residents of one territory do not generally have a need for funding in the urreny of another territory. Therefore, there is a natural symbiosis between resident and non-resident market partiipants. In urreny swap markets, as in 4 5 For short-term transations, up to one year, foreign exhange (FX) swaps are more widely used. Unlike urreny swaps, FX swaps do not involve an exhange of payment streams; only the prinipal amount is exhanged. The downward move in spreads in 8 likely refleted a ombination of supply pressures and hanges in the risk harateristis of the underlying money market instruments. See Baba and Paker (8) for a disussion. BIS Papers No

4 other segments of foreign exhange markets, ontrols that restrit transations between residents and non-residents tend to depress trading ativity (Tsuyuguhi and Wooldridge, 8). While investors an partiipate in urreny swap markets, the partiipation of issuers appears to be espeially important for the development of these markets. Issuane by non-residents of bonds denominated in a given urreny has signifiant explanatory power for the turnover of urreny swaps in that urreny (Figure 5a). In other words, ountries with large non-resident partiipation in their bond markets relative to GDP tend to have large urreny swap markets. New Zealand and Switzerland are at one extreme and many emerging market urrenies are at the other. The relationship between issuane by residents of bonds in foreign urrenies and loal urreny swap ativity is weaker but still positive (Figure 5b). It is unlear whether foreign urreny issuane is a preondition for the development of a urreny swap market. For example, Korea has a large urreny swap market even though few non-residents borrow in Korean won. What is lear is that ativity in one market supports ativity in the other. This self-reinforing relationship is onsistent with the ontention, put forth by MBrady and Shill (7) among others, that internationally ative bond issuers are the arbitrageurs who effetively link global bond markets. 3. Motivations for swap-overed foreign urreny borrowing There are two ommonly ited explanations for the use of swaps: risk management and omparative advantage (Kolb, ). Risk management is undeniably an important motivation for the general use of urreny swaps. When either the operations or the desired finanial struture of a firm hanges, urreny swaps are a ost-effetive way to transform risk exposures and alter future ash flows. However, hanges in operations and finanial strutures annot explain swap-overed borrowing; by definition, suh borrowing is intended to repliate risks, not to transform them. Bond issuers raising funds in one urreny with the express intention of swapping the funds for another urreny are hoosing to repliate ash flows that ould be also be ahieved by borrowing diretly in the desired urreny. Comparative advantage is a more onvining motivation for swap-overed foreign urreny borrowing. Indeed, entral banks in ountries with large volumes of swap-overed borrowing frequently ite omparative advantage as the key motivation for suh borrowing (eg see Ekhold, 1998; Drage et al, 5; Olafsson, 5; Ryan, 7). In finanial markets, omparative advantage exists when the same risk is pried differently in different markets. If borrowing osts differ aross markets, then issuers an redue their overall finaning osts by raising funds in the market in whih eah has a omparative ost advantage and swapping the proeeds. Covered interest parity The existene of omparative advantage reates opportunities for arbitrage. As arbitrage takes plae, osts should onverge onsistent with overed interest rate parity. Empirial support for long-term swap-overed interest parity is weak relative to short-term overed interest parity using forward ontrats. 6 Most studies find that deviations from long-term interest parity are small on average but an be large and persistent. Popper (1993) estimates 6 On short-term interest parity, see Taylor (1987) and Peel and Taylor (2). 148 BIS Papers No 52

5 mean absolute deviations of 15 to 5 basis points among major urrenies for the period Flether and Taylor (1996) adjust for transations osts and estimate deviations of 12 to 33 basis points for the period The persistene of deviations from overed interest parity does not neessarily prove the availability of arbitrage opportunities. Measured deviations may reflet underlying risks. In other words, estimated differenes in borrowing osts aross markets may ompensate for risks and so, on a risk-adjusted basis, may not indiate a omparative ost advantage. Turnbull (1987) suggests that spread differenes for seemingly idential risks reflet ompensation for redit risk taken on by the higher quality ounterparty in a swap agreement. Counterparty redit risk an be important for urreny swaps beause they involve an exhange of both prinipal and interest payments, in ontrast to interest rate swaps where only interest payments are exhanged (Duffie and Huang, 1996). Similarly, urreny basis swap spreads inorporate differenes between the redit risk embedded in the money market rates of one urreny and that in the other urreny (Tukman and Porfirio, 3). For example, if the non-dollar leg of a urreny basis swap is based on a ollateralised rate, suh as a rate for bankers aeptanes, and the US dollar leg is based on Libor, an unseured bank lending rate, then the swap spread is fairly pried only when positive. Nevertheless, several studies find that issuers systematially respond to estimated deviations from interest parity. Cohen (5) finds that the hoie of urreny in international bond issuane is influened by urreny strength and interest rate differentials, suggesting a role for expeted, unovered interest returns. MBrady and Shill (7) examine opportunisti foreign urreny issuane by firms with no foreign urreny revenues over the period They find that unovered interest bargains of 1 to basis points are ommon and persistent and that the hoie of issuing urreny is influened by differenes between loal and foreign funding osts. Even if there is no observed deviation from overed interest parity, if market imperfetions and fritions give rise to asymmetries between markets that an be arbitraged through swapovered borrowing, large volumes of swap-overed foreign urreny borrowing may persist in order to maintain swap-overed interest parity. Imperfetions vary signifiantly among markets. In general, large finanial markets, partiularly US dollar and euro markets, more losely meet the ideal of a omplete market than small markets, suh as Philippine peso or Indian rupee markets. 7 Differenes among markets potentially give issuers more favourable aess to one market than to another, thereby raising the possibility that issuers an gain by exploiting their omparative advantage and engaging in swap-overed borrowing. The remainder of this setion fouses on four types of market imperfetions that potentially give rise to ross-border arbitrage opportunities: transations osts, non-traded assets, ageny and information problems, and regulations. The importane of eah of these as a motivation for swap-overed foreign urreny borrowing is likely to differ aross markets and hange over time. In liquid, omplete markets, pries an adjust to new information without any trading taking plae and so arbitrage is unlikely to explain why issuers engage in swapovered borrowing. In less liquid markets, pries are slower to adjust and thus arbitrage opportunities may exist, but probably only temporarily. In illiquid, inomplete markets, arbitrage opportunities may be substantial and persistent. 7 There are exeptions. For example, yen finanial markets are the third largest in the world but sterling markets are widely pereived to be more developed. For a ranking of finanial setor development, eg see World Eonomi Forum, 8. BIS Papers No

6 Transations osts At the simplest level, the existene of transations osts would tend to favour borrowing diretly rather than through a more omplex route involving multiple transations. Transations osts, however, differ substantially among markets. In finanial markets, some types of transations osts are a dereasing, non-linear funtion of volumes. For example, the maintenane of trading systems involves fixed osts and, therefore, total trading osts deline as volumes inrease. In addition, the heterogeneity of market partiipants is often greater in large markets, thereby reduing searh osts. The self-reinforing nature of market liquidity strengthens the link between transations osts and volumes: the willingness of a market partiipant to transat in a given market depends on the willingness of other partiipants to do likewise (CGFS, ). As a result, transations osts an differ signifiantly for nearly idential instruments. 8 In a small market, the volume of transations in any given instrument will naturally be smaller than in a large market, and transations osts will be orrespondingly higher. If the relationship between volumes and transations osts is onvex, then the ost differene of issuing a large bond in a small market ompared to a large market may be less than the differene to issuing a small bond. Owing to differenes in relative transations osts, issuers from small markets, espeially issuers of small bonds, may be able to lower their borrowing osts by tapping more liquid markets. In addition to varying with volumes, transations osts often vary with the riskiness of the traded instrument. Chakravarty and Sarkar (1999) find that both trading volumes and risk are equally important determinants of bid ask spreads in US fixed inome markets: spreads deline with trading volume and inrease with the bond yield and residual maturity. Consequently, relative transations osts for risky bonds, inluding low-grade bonds and long-duration bonds, may be lower in large markets. Transations osts an be broadly defined to inlude enforement and bankrupty osts. Enforement proedures are simpler in ertain jurisditions. In the international bond market, ontrats are predominantly governed by English law, regardless of the resideny of the issuer or the urreny in whih the bond is denominated. The probability of a reditor needing to take enforement ation varies aording to the redit quality of the borrower and, therefore, low-grade borrowers from markets where enforement osts are high may be able to lower their finaning osts by ommitting to ontrats settled in more reditor-friendly jurisditions, and swapping the proeeds with a non-resident borrower that an signal high redit quality and issues debt in the market with weak enforement. While this is primarily a motivation for offshore borrowing (the borrower from the weak-enforement market ould issue in the desired urreny in the euromarket), if offshore use of a urreny is restrited then differenes in the legal and information environments an also motivate an exhange of borrowings between low-grade and high-grade borrowers. Transations osts may also help to explain why issuers, rather than investors, appear to be the main arbitrageurs in international bond markets. Investors typially trade in smaller volumes than issuers; one bond issue is typially bought by many investors. If investors are willing to assume redit risk but not urreny risk, then it is likely to be heaper for the issuer to bundle a urreny swap together with a foreign urreny bond than for multiple investors to buy a foreign urreny bond and swap out the urreny risk. 8 For example, in government seurities markets, bid-ask spreads are usually muh narrower for reently issued ( on-the-run ) bonds than for off-the-run issues (see eg CGFS, ; Fleming, 2). 15 BIS Papers No 52

7 Non-traded assets The literature on non-traded assets 9 identified a variety of reasons why markets may be segmented and inomplete and, in turn, diversifiation in international finanial markets may be diffiult. 1 The range of assets traded differs substantially among markets. The absene of a partiular type of asset may arise from either a lak of supply or a lak of demand. The struture of an investor s liabilities may reate demand for partiular types of assets; onversely the struture of a borrower s assets may reate demand for a partiular form of funding. This an make it diffiult for investors to optimise their portfolios to meet their investment objetives, and make it diffiult for borrowers to raise funding without one or the other taking on additional risk. Consequently, investors may end up shunning ertain risks altogether. Generally, smaller markets tend to have more non-traded assets than larger markets. The juxtaposition of assets that are traded in one market but not in another an reate opportunities for arbitrage. An important asset missing in some markets is bonds with minimal default risk, ie bonds with the highest, AAA redit ratings. National governments are typially the most reditworthy borrowers in their own urreny. In ountries where the government is not very reditworthy (for example beause it has a history of poor maroeonomi management), there are unlikely to be other resident issuers with (international) AAA redit ratings. There is usually a sovereign eiling, whih aps the pereived reditworthiness of borrowers in a ountry. Even in ountries where the government is very reditworthy, there may be a sarity of highly rated debt beause fisal prudene restrits the supply of government debt. Swapovered borrowing involving a highly rated non-resident issuer allows issuers to fill the void, benefiting from the tighter redit spread on top-rated bonds relative to lower-rated bonds. Another important asset missing in some markets is long-term, fixed-rate bonds, ie bonds with maturities beyond five years paying a fixed (as opposed to a floating) oupon. In ountries with a history of poor maroeonomi management, a high degree of eonomi unertainty an ause investors to avoid suh investments. Even in ountries with a stable poliy environment, investors may be onstrained (by regulation or by liability struture) from buying long-term, fixed rate bonds, or may prefer not to beause of risk preferenes. As a result, the ost of issuing a long-term, fixed rate bond an vary signifiantly among markets. Other important assets missing in some markets are foreign exhange, interest rate and redit derivatives. Derivatives failitate the unbundling of risks. 11 Loal urreny bonds are typially exposed to exhange rate, interest rate and redit risks, whih investors may be willing to bear individually but not in ombination, partiularly if these risks are orrelated (for example, domesti redit risk may be orrelated with urreny risk). 12 If instruments are See Cuthbertson (1957) for a disussion of heterogeneous lienteles as an explanation for the term struture of interest rates; Modigliani and Suth (1966) on preferred habitat (bond investors prefer one maturity over another, for example to math their liabilities, and are only willing to buy bonds outside of their maturity preferene is a risk premium is paid). Svensson and Werner (1993) examine portfolio hoie and asset priing when some assets are non-traded, for example, when a ountry annot trade laims to its output on world apital markets. Vayanos and Vila (7) present a model in whih arbitrageurs integrate markets. See Frenh and Poterba (1991), Baxter and Jermann (1997) on the extent of the lak of diversifiation and Obsfeld and Rogoff () in the ontext of a broader disussion. Burger and Warnok (7) find that high variane and negative skewness deter US investors from investing in foreign bonds markets. To the extent that these risks an be hedged or unbundled (eg they are redit or market risk), there may be gains to swap-overed borrowing; to the extent that they are the result of poor maroeonomi management, swap-overed borrowing may not overome them. For example, if, in times of stress, the redit quality spread rises (the prie of the bond falls) at the same time as the minor urreny depreiates (flight to quality to the US dollar), then a highly rated non-resident will be in a position to unbundle those risks relative to a lower-rated domesti bond. BIS Papers No

8 available in one market to unbundle risks but not in another, then this an reate opportunities for arbitrage. Investors seeking exposure to redit risk may be willing to buy bonds issued by low-grade foreign borrowers, whih potentially redue the idiosynrati risk in their portfolios but, in the absene of a liquid urreny swap market, do so only in a given urreny. For investors seeking exposure to exhange rate or interest rate risk, loal urreny bonds issued by high-grade non-residents may be in greater demand than bonds issued by lower-grade residents in the absene of a liquid redit derivatives market. Herrerra Pol (4) suggests that strong demand for the World Bank s issues of international bonds in minor urrenies is explained in part by investors preferene to take on minor urreny risk separate from redit risk. If issuers an unbundle risks for investors, then they may ahieve lower borrowing osts. Common themes in disussions with market partiipants are segmentation of markets for urreny risk and redit risk, and diffiulty among domesti issuers in plaing domesti urreny debt diretly. Ageny and information problems Ageny and information problems are omnipresent in finanial markets but are more aute in some markets than others. In partiular, the effetiveness of mehanisms to mitigate ageny and information problems varies onsiderably. Some ountries have weak dislosure requirements, poor aounting praties, opaque orporate governane rules, and onentrated ownership strutures. Suh information asymmetries ontribute to home bias, whereby investors hold a larger share of loal assets in their portfolios than would be optimal in a well diversified portfolio. Stulz (1981) onstruts a simple model of international asset priing in whih there is a ost assoiated with holding risky foreign assets and shows that they will not hold some foreign assets, even if the return is inreased slightly. 13 Furthermore, loal investors tend to be better informed than foreign (distant) investors. For example, for a sample of 32 ountries, Bae, Stulz and Tan (8) find that loal analysts earnings foreasts are more preise than those of analysts based in ountries far from the ompany being analysed. Moreover, borrowers from ountries where mehanisms to mitigate ageny and information problems are weak may be able to expand their investor base, thereby lowering their finaning osts, by ommitting to ontrats that require them to adhere to higher standards. Foreign bond markets potentially serve this purpose. 14, 15 This is primarily a motivation for offshore borrowing, but if offshore use of a urreny is restrited then it may be mutually advantageous for borrowers from markets with weak standards to issue abroad in foreign urreny and swap with borrowers that are able to signal higher standards See also Stulz (5) whih disusses ageny problems in the ontext of foreign investment and Alfaro et al (8) whih examines explanations for the Luas paradox (the lak of apital flows from rih to poor ountries). and finds institutional quality to be the most important. Banks play an important role in overoming ageny and information problems For example, Hale and Santos (8) find that firms with a reord of high reditworthiness and low reditworthiness enter the publi bond market (investment grade market and high-yield markets respetively) before firms with an intermediate reputation. Moreover, a firm s relationships with investment banks in onnetion with private bond issues and syndiated loans may speed entry into the publi bond market by allowing the firm to signal higher redit quality. The literature on equity ross-listings finds some evidene of higher valuations for firms listed in the US due to greater dislosure (Doige, Karolyi and Stulz (4). This argument is weaker for bonds however as dislosure requirements tend to be weaker. 152 BIS Papers No 52

9 Regulations Regulatory barriers, suh as taxes, reporting requirements and exhange ontrols, an reate signifiant differenes in finaning osts between markets. Moreover, these differenes an persist until there are hanges to the regulatory wedge (Smith et al, 1986). Regulatory barriers are ommonly imposed by governments or government agenies. Market partiipants themselves may also reate regulatory barriers, for example through investment mandates that restrit the range of investible assets. The list of potential regulatory barriers is long and many reate ost differenes between onshore and offshore borrowing. Regulatory barriers were pivotal fators in the growth of offshore markets for US dollars. To the extent that regulatory barriers restrit the offshore use of a urreny, they may also motivate swap-overed borrowing. Indeed, urreny swaps evolved out of instruments strutured to irumvent exhange ontrols. In the 197s, the United Kingdom restrited apital outflows. Firms planning foreign investments irumvented the restritions through a parallel loan, in whih a UK ompany made a sterling loan to the UK subsidiary of a foreign ompany and the foreign ompany lent the equivalent amount in foreign urreny to the foreign subsidiary of the UK firm (Clark, 4). Even in the absene of exhange ontrols, there are other regulatory barriers that an give different advantages to resident and non-resident borrowers. Restritions that effetively segment low-grade and high-grade markets are one potentially important soure of omparative advantage. For example, assets eligible for use as ollateral in entral banks lending operations often trade at a premium beause the available supply is limited. Highgrade bonds issued by non-residents are sometimes eligible, potentially reating an opportunity for suh borrowers to lower their finaning osts by engaging in swap-overed borrowing. Furthermore, many institutional investors are restrited by mandate from investing in low-grade bonds. These restritions are less distortionary in markets with heterogeneous investor bases, suh as large markets, and so low-grade borrowers may gain from issuing in larger markets and swapping the proeeds. Mandates that restrit the range of investible assets or the use of derivatives may also be a fator in explaining why arbitrage opportunities in international bond markets are exploited more atively by issuers rather than investors. The market imperfetions and fritions disussed above have a number of impliations for the harateristis of swap-overed foreign urreny bond issuane if suh issuane is used to overome those market rigidities. In the next setion, we draw out those impliations and ompare them to the harateristis of bonds and issuers. 4. Data and empirial results From the disussion in Setion 3, it follows that if market imperfetions and fritions are key motivations for swap-overed borrowing, then there should be lear differenes in the harateristis of foreign urreny bonds issued by those engaged in suh borrowing and on opposite sides of the urreny swap. In partiular, for any ountry or urreny blo, there should be lear differenes between foreign urreny bonds issued by residents and loal urreny bonds issued by non-residents. We examine these differenes for 13 Asia-Paifi ountries and find that bond harateristis are generally onsistent with issuers seeking to arbitrage ost differentials. Data soures Data on individual bond issues are obtained from the international debt seurities database ompiled by the BIS. This database ombines information from several ommerial data providers, namely Dealogi, Eurolear and Thomson Finanial. The BIS seeks to apture all foreign urreny bonds (foreign bonds and eurobonds) as well as loal urreny bonds BIS Papers No

10 marketed to foreign investors, suh as the international tranhes of global bonds. The overage of foreign urreny bonds is lose to omplete. Charateristis reorded for every bond in the database inlude: date of issue, original term to maturity, issue size, oupon struture (fixed or floating), urreny and market of issue, type of issue (bond or medium-term note), and resideny and industry setor of the issuer. The redit rating of the bond at the time of issue is also aptured, but not for all bonds. Our sample overs the period. We exlude bonds with an original maturity of less than one year beause overage is inomplete for short-term funding instruments. The BIS database inludes neither US ommerial paper nor interbank plaements, whih are lose substitutes for money market instruments. We also exlude onvertible (equity-linked) bonds beause the funds raised are typially not swapped by the issuer. From the BIS database, we extrat all foreign urreny bonds issued by residents of 13 Asia-Paifi eonomies: Australia, China, Hong Kong SAR, India, Indonesia, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Chinese Taipei. We also extrat all bonds denominated in the urrenies of these same 13 eonomies and issued by non-residents. This results in 26 sub-samples. Bonds issued by residents of offshore finanial entres and not denominated in the loal urreny of the entre are lassified as foreign urreny bonds regardless of the nationality of the issuer. For example, a Hong Kong dollar bond issued by the Cayman Islands-based subsidiary of a Hong Kong firm is lassified as a Hong Kong dollar issue by a non-resident. The number of observations in the 26 sub-samples varies enormously. The number of foreign urreny bonds issued by Asia-Paifi residents ranges from 1,16 by Australian residents to 22 by Taiwanese residents. The number of bonds denominated in Asia-Paifi urrenies issued by non-residents ranges from 79,2 in Japanese yen to four in Chinese renminbi. For eah of the 13 ountries and every bond harateristi of interest, we test for differenes between the distribution of foreign urreny bonds issued by residents and the distribution of loal urreny bonds issued by non-residents. The distributions are typially severely skewed, and so we use a non-parametri test: the Wiloxon-Mann-Whitney test, orreted for tied ranks (eg see Siegel and Castellan, 1988). The null hypothesis tests whether the two sets of observations do not differ systematially from eah other. The alternative states that they do differ systematially, implying that they are not samples from the same population. We alulate size-weighted means, to aount for skewness in issue sizes, as well as equally weighted means. One important piee of information missing in our sample is whether the issuer swapped the funds raised into another urreny. As a result, our sample is biased against finding patterns onsistent with arbitrage by issuers. Swap-overed borrowing is surely not the sole motivation behind all foreign urreny bonds in our sample, and so using the sample to test whether market imperfetions an explain issuer behaviour redues the probability of a type II error but heightens the probability of a type I error. Results There are several potential ways to ompare the harateristis of the bond data with the impliations from the previous setion. Here we present a univariate analysis ontrasting harateristis of bond issues in foreign urrenies by residents of a given market with the harateristis of issues in the loal urreny of the same market by non-residents. Summary statistis are presented in Tables 2 to 9. Histograms are plotted in Figures 6 to BIS Papers No 52

11 Curreny of issuane Table 2 ompares the urreny omposition of foreign urreny bonds issued by Asia-Paifi residents with the resideny omposition of loal urreny bonds issued by non-residents. Foreign urreny issuane is highly onentrated in the US dollar market. Conentration is lowest among Australian and New Zealand issuers, who borrow large amounts of euro and minor urrenies in addition to US dollars, and highest among Indian issuers (a small sample). The US domesti market aounts for about % of global domesti debt markets, as reported in BIS statistis. In ontrast, the share of US dollar issuane among residents of these Asia-Paifi ountries is typially muh higher. 16 For loal urreny bonds issued by non-residents, the distribution of issuane aross urrenies is less onentrated, onsistent with the notion that differenes aross markets reate opportunities for gains from trade. The onentration in US dollar borrowing ould relate to a several harateristis of the US market, inluding a large low-grade market (lower osts or stronger risk assessment infrastruture), size of the term market (lower osts), flexibility from a (usually) liquid shortterm ommerial paper market. If transations osts are a onvex, dereasing funtion of volumes, and different market segments (in the domesti or foreign market) have different volumes there may be gains from swap-overed borrowing with a non-resident with different harateristis. Foreign urreny bonds issued by residents of a smaller or more segmented markets will tend to be denominated in urrenies of larger markets, where the differene in osts between market segments is smaller. Conversely, bonds issued by non-residents in the smaller or more segmented market will tend to be issued by residents of large markets (to provide a swap ounterparty). Credit quality and maturity are disussed in more detail below. Issue size Table 3 and Figure 6 summarise distributions by issue size. For 1 of the 13 omparisons, the mean size of foreign urreny bonds issued by residents is larger than that of loal urreny bonds issued by non-residents. This result does not support the hypothesis that onvex and dereasing transations osts play a role (whih would suggest that foreign urreny bonds issued by residents of small markets would tend to be smaller in size). Instead it supports the idea that residents issue in a foreign urreny to aess a larger or more liquid market, while non-residents issuing in loal urreny are limited by market size or market liquidity. Credit quality Table 4 summarises the distribution of redit ratings for foreign urreny bonds issued by residents and loal urreny bonds issued by non-residents. Lower numbers orrespond to higher redit ratings, eg 1 = AAA. For all ases exept Japan, the redit ratings of bonds issued by non-residents are signifiantly higher than those of bonds issued by residents. Differenes in the distribution of redit ratings are onsistent with low-grade and high-grade borrowers exploiting a omparative advantage to lower their borrowing osts. Suh an advantage ould arise from differenes in transations osts, enforement osts, non-traded assets, or regulations. As shown in Figure 7, this result is mainly due to the fat that non-resident issuane is onentrated in the AAA segment of the market. If there are few domesti high grade issuers (eg beause of a low sovereign eiling, or beause of fisal prudene) leading to a sare or 16 Only in New Zealand is it lower, but that may be beause New Zealand banks borrow through their Australian parents. BIS Papers No

12 non-traded high-grade asset in that urreny, then non-residents issuing bonds in that urreny will tend to be highly rated (eg greater than or equal to the sovereign eiling). Regulations may reinfore this from the demand side, if ertain lasses of investors (eg pension funds or assets aepted as ollateral) are restrited to high-grade debt. Enforement mehanisms may also play a role. If there are differenes aross markets in enforement mehanisms to mitigate ageny and information problems, then residents of weaker enforement areas will tend to issue foreign urreny bonds in markets that adhere to higher standards, and loal urreny bonds issued by non-residents will be issued by residents of areas that adhere to higher standards or by borrowers who an otherwise signal redit quality suh as international organisations. Industry setor As a ross-hek on the distribution of redit ratings, we also ompare the distribution of issuers by industry setor. Whereas data on redit ratings are inomplete, data on industry setors are available for the issuer of eah bond. Credit ratings and industry setors are loosely orrelated. Supranational institutions and national governments from high-inome ountries tend to be the highest-rated issuers, with AAA or AA ratings. Finanial institutions are typially rated AA or A, and non-finanial orporations A or lower. However, bond issues may be rated either higher or lower than the issuer, depending on redit enhanements, subordination, and other ontratual lauses. In nine of the 13 omparisons, resident issuers of foreign urreny bonds ame from setors that tended to be lower rated than the setors from whih non-resident issuers of loal urreny bonds ame (Table 5). Among both resident and non-resident issuers, banks and non-bank finanial institutions were the dominant issuers (Figure 8). However, there were important differenes in the industry setor of the next largest group of issuers. Among non-resident issuers supranational institutions and governments were ative, whereas among resident issuers non-finanial orporations were more ative. Maturity If differenes aross markets in the demand for and supply of funding lead to a relatively small or illiquid long-term bond markets, then foreign urreny bonds issued by residents of the smaller market will tend to have a longer term to maturity relative to loal urreny bonds issued by non-residents. There is weak support for the notion that residents tap foreign urreny markets for longer-term funding. The maturity of foreign urreny bonds issued by residents is often, but not always, longer than that of loal urreny bonds issued by non-residents (Table 6 and Figure 9). In eight of the 13 omparisons, the maturity of foreign urreny bonds is longer. In four omparisons, the maturity of loal urreny bonds is longer. In one ase, the Philippines, there is no signifiant differene, although the issue weightedmean maturity is longer for foreign urreny bonds. Coupon struture If differenes aross markets in the demand for and supply of funding lead to a relatively small or illiquid fixed oupon bond markets, then foreign urreny bonds issued by residents of the smaller market will tend to have a greater proportion of fixed rate strutures relative to loal urreny bonds issued by non-residents. The data do not support that hypothesis. Fixed rate bond issues aount for a smaller share of foreign urreny bond issues by residents than they do for loal urreny bond issues by non-residents (Table 7). In eight of the 13 omparisons, this is the ase. In four omparisons, there is no signifiant differene in interest rate strutures. Only in one ase, Indonesia, do residents appear to tap foreign urreny markets for fixed rate funding. 156 BIS Papers No 52

13 Foreign bond or Eurobond Foreign urreny bonds an be issued as either foreign bonds or Eurobonds. Foreign bonds are issued onshore, in the urreny of the market where the bond is registered, whereas Eurobonds are issued offshore, in a urreny different from that of the market where the bond is arranged. Reporting requirements are typially more extensive for foreign bonds than Eurobonds. However, issuers do not appear to use foreign urreny bonds as a devie to ommit to higher reporting standards. The Eurobond market is learly the market of hoie for foreign urreny issues (Table 8). In only four ases residents of China, Malaysia, Thailand and Chinese Taipei are issuers more likely to issue foreign bonds than Eurobonds. All four ountries have exhange ontrols that deter offshore use of the urreny. Among the five substantial markets in terms of size (Australia, Hong Kong, Japan, New Zealand and Singapore) issuane is very skewed toward Eurobonds. Peristiani and Santos (8) report that, 1 years ago, it was heaper to issue a bond in the US market, and that underwriting osts have delined over the deade. Eurobond osts, however, have fallen faster, eliminating the ost differential. Single or multiple issue We also onsidered whether a bond was issued as a single issue or part of a medium-term note (MTN) programme. A single bond issue often requires extensive doumentation, whereas under a MTN programme the same doumentation an be used for multiple seurities. 17 Therefore, MTNs are less effetive devies for ommitting to higher reporting standards. Loal urreny bonds issued by non-residents are overwhelmingly MTNs (Table 9). For residents of Australia, Hong Kong, New Zealand and Singapore (the more developed international bond markets and higher rated ountries) foreign urreny bonds issued by residents are also almost all MTNs. In most other Asia-Paifi eonomies, residents issues are usually single issues. These patterns provide some support for differenes in reporting standards as a motivation for swap-overed borrowing. Alternatively, they may simply reflet the role of large, regular borrowers as the arbitrageurs in international bond markets. 5. The risks of swap-overed funding The use of foreign urreny bonds to raise loal urreny debt indiretly an pose risks to the finanial stability of both the borrower and the borrowing eonomy. Swap-overed debt is a more omplex produt than diret borrowing, so puts greater demands on the risk management apaity of the borrower and the regulator in terms of urreny risk, ounterparty risk, rollover risk, and interest rate risk. Of these the most important is probably rollover risk, partiularly where there are large net or gross external debt positions. In this setion, these risks are disussed in turn, followed by a brief overview of how they played out in Australia and New Zealand in 7-8, two ountries with substantial net external debts funded in part through swap-overed borrowing. The disussion reinfores the importane of strong risk management, a sound banking system, the ability and willingness of governments to provide temporary support and the benefits of domesti savings and more stable forms of external funding suh as foreign diret investment. 17 Eah new MTN requires only a priing supplement setting out the terms of the issue. MTNs are typially issued by large borrowers, who regularly dislose information, and they are frequently tailored to satisfy speifi investor preferenes. BIS Papers No

14 External debt and rollover risk An important onern assoiated with syntheti loal urreny borrowing is a rapid inrease in external indebtedness. Where it has been widely used, there are typially large gross or net external debt positions. Many of the potential motivations disussed in Setion 3 suggest that borrowers previously restrited to borrowing loal urreny diretly may be able to aess heaper funding or a wider pool of funding by overoming market rigidities. Greater aess to external funding may in turn lead borrowers to inrease finanial leverage, while inreasing exposure to external wholesale funding. The risks, of ourse, need to be weighed against the benefits of finanial integration and the extent to whih they an be mitigated through prudential supervision. The bulk of swap-overed finaning involves finanial intermediaries, and so maturity mismath is a potential onern. Maturity mismath may lead to rollover risk on two levels: during the tenor of the swap and at maturity of the swap. If the swap does not math the foreign urreny debt and loal urreny assets in terms of tenor and oupon struture, as well as urreny, then the borrower may fae urreny risk, rollover risk and interest rate risk. Even if the swap mathes assets and liabilities, rollover risk will re-emerge at maturity of the swap if the debt needs to be rolled over (for example, if net external debt is large). The rollover risks may be large for swap-overed borrowing whih relies on wholesale funding soures. The same is true for wholesale funding in loal urreny. Both tend to be less stable than the domesti deposit base whih typially benefits from deposit insurane. Wholesale borrowing is normally not overed by government deposit insurane, and is likely to be less stable during a risis. Non-resident investors may be a partiularly unstable funding soure, providing funding during expansions when the loal urreny is expeted to appreiate, and withdrawing funding during times of stress if the loal urreny is expeted to depreiate. The ability to substitute domesti funding for large volumes of external funding (diret or swap-overed) may be very limited. Large net debt suggests weak domesti savings performane. The private savings rate may inrease by a few perent relative to GDP, but the inrease in savings may be small relative to gross external finaning requirements in the event of severe external funding stress. Moreover, with integrated markets, external funding pressures are likely to spread quikly to domesti markets. In the event of severe stress publi savings will almost ertainly be alled upon, where feasible, to fill the funding gap if the net debt is large. Swap-overed borrowing requires rollover in both funding and hedging markets. This added omplexity may inrease risk relative to external loal urreny funding. Allayannis et al (3) look at a sample of East Asian non-finanial borrowers and find that, during the Asian risis, the finanial performane of firms that used syntheti loal urreny debt was worse than those that relied on diret loal or foreign urreny borrowing. They attribute this result to the illiquidity of swap markets, whih made it expensive for firms to roll over short-term derivative positions used to hedge long-term debt. Swap-overed borrowing may allow a borrower to diversify funding soures. Among integrated finanial systems, however, market liquidity is likely to be highly orrelated so that diversifiation of the funding base may offer little sope for reduing rollover risk. Diversifying the funding base from the domesti market (in the periphery) to the US markets (the entre) may normally be onsidered a good approah to reduing liquidity risk as US markets are normally very liquid and may be resilient to stress in the periphery. Stress in the entre, however, is likely to spread to smaller markets in the absene of exhange ontrols (see Baba and Paker (8) for a disussion of foreign exhange forward and swap market disloations in 7 8). A sharp rise in the ost of foreign urreny funding may translate rapidly to a rise in the ost of loal urreny funding. With some degree of segmentation among markets, however, there may be some sope to redue market risk. This appears to have been the ase to some degree in 8 with a number of new issuers entering the Samurai market (Japanese yen bonds issued in Japan by non-residents). 158 BIS Papers No 52

15 Curreny risk The ability to hedge urreny risk is a major potential benefit of swap-overed borrowing for an emerging eonomy that has diffiulty borrowing in its own urreny. It an potentially benefit from aess to international finanial markets without urreny mismath if a non-resident an suessfully issue loal urreny debt to provide a swap ounterparty (if exhange ontrols do not prohibit). Interest rate risk Even if borrowings are strutured so that urreny and tenor are hedged, interest rate risk ould still be a problem if loal urreny inome and loal urreny payments under the ross urreny swap are not mathed. For example, if a domesti bank swaps foreign urreny payments for fixed term loal urreny payments, but has floating rate loal urreny inome (or vie versa) it may fae diffiulty if monetary poliy is adjusted rapidly. Liquid loal urreny interest rate swap markets help manage interest rate risk. Replaement risk Swaps are generally traded in over-the-ounter markets. While this allows ustomisation of produts, without entral learing the two borrowers assume eah other s redit risk. Various hedged risks, inluding urreny risk, an re-emerge if one ounterparty to the swap defaults. As reent developments have shown, assessing ounterparty risk is ompliated by the opaity of firms finanial positions. When one ounterparty fails, the other may be left with a mismathed position due to interest rate or urreny flutuations. For example, suppose the minor urreny resident holds minor urreny prinipal as ollateral but has US dollar liabilities at maturity. If the minor urreny depreiates sharply, losses ould be substantial. Bilateral netting and ollateral arrangements are widely used to redue the risks assoiated with a ounterparty default. Central learing may redue risks further by providing a highly rated entral ounterparty, requiring positions to be marked to market daily, and making use of multilateral netting through offsetting long and short positions. Potential barriers are low liquidity in minor urreny markets, whih may delay or prevent market making, and high margins for those providing swaps in a less transparent environment. Domesti market liquidity A potential onern regarding syntheti debt is that offshore issuane may take liquidity from the domesti market. Swap-overed borrowing itself does not neessarily redue the size of the loal urreny market. Rather, it hanges the omposition of issuers in the market from domesti borrowers to non-resident borrowers. However, if non-resident borrowers prefer to issue on the offshore markets, there may be a loss of liquidity in the domesti market. This need not be the ase, however. Offshore issuane may omplement domesti market development through ompetition that motivates effiieny or by establishing a minor urreny assets lass (widening the pool of potential investors). How have the risks played out in 7 8? In the Asia-Paifi region, Australia and New Zealand stand out as ountries with large outstanding amounts of swap-overed borrowing and large net external debts. Non-resident loal urreny bond issuane at end-7 was 44% of GDP in New Zealand and 27% of GDP in Australia. In this setion we briefly disuss reent developments in those two markets. Most previous rises had been onentrated in the periphery, and the US markets were thought to be deep and liquid so that additional funding ould be found without large adverse prie movements. This turned out to not be the ase. Borrowing osts rose sharply with the BIS Papers No

16 drying up of the US ommerial paper market, an important soure of temporary liquidity, and disloation in urreny swap markets assoiated with dollar funding pressure and ounterparty onerns. The US dollar shortage spread quikly to domesti markets, where funding osts rose as borrowers turned to domesti markets for funding. The rise in US dollar osts was moderated a little as demand for dollars drove down the ost of swapping US dollar funding into other urrenies where liquidity pressure was less severe. With inreased risk aversion, plaing minor urreny debt diretly beame more diffiult. Australian banks and their New Zealand subsidiaries appear to be managing these risks suessfully. The banks entered the risis well apitalised and profitable. Hedging appears to have largely mathed external borrowings and loal urreny assets. Asset quality has deteriorated somewhat, but not sharply and gross positions are modest. Rollover risk, or the degree to whih it translates into higher funding osts, has been very important beause of the large net external debt. While private savings have risen and deposits inreased, this has been far from the sale required to fund urrent the aount defiits and roll over external debt. Several other fators have helped to fill the potential funding gap. First, liquidity provision by the two entral banks was saled up rapidly. The ability to rapidly sale up liquidity has, in turn, been failitated by effetive ontrol of the overnight interest rate whih has meant that an inrease in liquidity need not undermine monetary poliy; and strong fisal positions (fisal surpluses and near-zero publi setor debt) that have allowed greater publi borrowing without adverse effets on publi setor redit quality. Seond, in early 8, the banks prefunded a substantial amount of maturing debt (despite high pereived osts at the time) as a ushion against ontinued market disloations, whih left them in a stronger position when rollover osts inreased later in the year. Third, government guarantees have helped the banks inrease both domesti and foreign urreny funding by upgrading the redit quality of bank debt to AAA in the ase of Australia and to AA+ in the ase of New Zealand. In both ases, the guarantees are intended to be temporary. Fourth, Federal Reserve initiatives to provide US dollar liquidity inreased redibility. These initiatives inluded provision of US dollar swap lines to several ountries, inluding Australia and New Zealand, and diret purhases of ommerial paper (for whih the AA banks were suffiiently rated to be eligible). Fifth, flexible exhange rates have aided adjustment. Curreny depreiation of about % relative to the US dollar has both inreased ompetitiveness (and so helped to redue funding requirements) and redued the US dollar value of the funding required. The latter has been valuable in the fae of US dollar market illiquidity as funding osts have tended to rise sharply with issuane volume. At the same time, urreny depreiation has not had adverse valuation effets as debts are effetively denominated in loal urreny. Overall, valuation effets are positive as foreign urreny assets have inreased in loal urreny. The resiliene of Australia and New Zealand in the fae of a US dollar risis, despite large net external debts funded largely through US dollar markets, suggests that widespread use of swap-overed borrowing an be managed. That resiliene has, however, been supported by a variety of mitigating fators inluding a well apitalised banking system with good risk management, a strong fisal position, salable domesti urreny liquidity provision, government guarantees, investment grade sovereign ratings, and floating exhange rates. Whether a ountry with a sub-investment grade rating or weaker institutions would be able to weather the same storm with substantial net debt is open to debate. 16 BIS Papers No 52

17 7. Conlusions As yet, few ountries onsistently aess external finaning in their own urrenies. Sound maroeonomi poliies are reognised as a neessary ondition for ountries to borrow in their own urreny. But sound maroeonomi poliy prie stability, fisal prudene, and a transparent exhange rate regime does not appear to be suffiient for some ountries, suggesting that miroeonomi onstraints may also be important. One suspet is domesti apital market development. The many initiatives to develop domesti bond markets in Asia in the past deade have failitated loal urreny funding by extending domesti market liquidity and maturity, improving redit assessment, reduing market fritions and domesti market risk, and inreasing non-resident aess, espeially for investors. Fisal prudene and foreign reserve aumulation have ontributed to rising sovereign rating eilings, supporting extension of the domesti bond market to higher-grade debt. Some aspets of bond market development, suh as the development of an internationally rated AAA market and liquid low-grade market, may take deades. Swapovered foreign urreny borrowing may help domesti borrowers to effiiently aess loal urreny funding in the meantime. This paper aims to fill a gap in the literature by outlining the motivations for swap-overed borrowing. In this paper we have onsidered aspets of bond market inompleteness, and market fritions that may be overome to some extent by swap-overed foreign urreny borrowing and therefore motivate that form of borrowing. Empirial assessment established several stylised fats. The harateristis of bond issuane by residents in foreign urreny and by non-residents in loal urreny (swap ounterparties) are signifiantly different in several respets. Foreign urreny issuane by residents is, on average, signifiantly lower rated, longer term and larger in size than non-resident issuane in the domesti market, onsistent with the notion that swap-overed borrowing may provide resident issuers with aess to larger, more liquid low-grade and long-term markets. Non-resident issuane in Asia-Paifi urrenies is highly skewed toward AAA issuers, suggesting that a redit quality gap is important. This is onsistent with several motivations, inluding a sarity of highgrade minor urreny debt, for example due to a low sovereign eiling or fisal prudene, regulations that limit ertain investor lasses to high-grade debt, and risk unbundling. In pratie, many of the motivations for swap-overed foreign urreny borrowing that we disussed may be valid in different ountries at different times. In less omplete and liquid markets, arbitrage of prie gaps is likely to predominate. Most ountries low-grade debt markets are relatively undeveloped ompared to the US market, and most ountries sovereign ratings are below AAA, so that swap-overed borrowing provides a potential means of arbitraging non-traded assets and unbundling risk. Even in ountries rated AAA suh as Australia and Singapore, non-resident issuane is a growing share of total issuane in domesti urreny, suggesting more persistent motivations suh as market ompleteness through diversifiation or risk unbundling. In reent years, bond markets in most urrenies have beome more international and ross-urreny swap markets have grown rapidly where not restrited. The events of 7 8 may reverse these trends in some markets for a while, and have helped in our understanding of the risks. Looking forward, more globally integrated markets, inluding signifiant volumes of this pattern of borrowing, look inreasingly to be the norm. The questions raised are important ones for poliymakers in terms of understanding urrent market developments, promoting domesti bond market development, finanial stability or understanding the potential effets of easing exhange ontrols. The ontinued development of domesti bond markets remains an important fous in reduing information asymmetries, developing more liquid low-grade and long-term markets, reduing market fritions and supporting other domesti finanial markets. Swap-overed borrowing provides a potential means of overoming market fritions, thus allowing domesti firms to raise finaning more effiiently while diversifying and deepening domesti urreny debt markets. Many unanswered questions provide fertile ground for further researh. BIS Papers No

18 Table 1 Average daily turnover of urreny swaps a April 1995 April 1998 April 1 April 4 April 7 All urrenies b 3,772 9,92 7,19 21,116 31,497 USD 3,126 8,628 5,944 17,65 27,333 EUR 2,19 9,732 11,2 GBP ,7 4,835 5,52 JPY 1,147 2,865 1,969 3,354 3,495 CAD ,388 CHF ,118 1,924 AUD ,573 1,824 KRW n/a ,33 SEK ,7 ZAR NZD HKD INR n/a TRL n/a n/a BRL n/a n/a NOK PLN n/a n/a DKK MXN n/a SGD IDR n/a CNY n/a n/a n/a TWD n/a THB n/a a b Turnover in over-the-ounter markets of the speified urreny against all other urrenies, in millions of US dollars. Data are adjusted for loal and ross-border interdealer double ounting but are not adjusted for gaps in reporting. The sum of transations in individual urrenies equals twie the total turnover beause two urrenies are involved in eah transation. Soures: BIS Triennial Central Bank Surveys. 162 BIS Papers No 52

19 Table 2 Share of issuane by urreny of issue and resideny of issuer a Foreign urreny bonds issued by residents: urreny of issue Loal urreny bonds issued by non-residents: resideny of issuer USD EUR JPY Other HH b US EU Supra d Other Memo: Nation e HH b AU <1.26 CN HK ID IN JP KR MY NZ PH SG TH TW AU = Australia; CN = China; HK = Hong Kong SAR; ID = Indonesia; IN = India; JP = Japan; KR = Korea; MY = Malaysia; NZ = New Zealand; PH = Philippines; SG = Singapore; TH = Thailand; TW = Chinese Taipei. a b d e Perentage share of total issuane over the 8 period, alulated in urrent USD. Hirshman-Herfindahl index of onentration. Euro area. Supranational insitutions. Non-resident issuers who are nationals of the speified ountry. Some nationals are inluded in the shares of US and EU residents, but most reside in Other ountries, mainly offshore finanial entres. Soures: BIS; authors alulations. BIS Papers No

20 Table 3 Distribution by size of issue a Mean: size weighted Mean: equal weighted Standard deviation Skewness Number of observations W test stat d AU ** CN HK ** ID ** IN ** JP ** KR ** MY ** NZ ** PH ** SG TH ** TW a b d In years. Foreign urreny bonds issued by residents. Loal urreny bonds issued by non-residents, ie bonds denominated in the speified urreny and issued by non-residents. Wiloxon-Mann-Whitney test; ** and * indiate that the null hypothesis, that the two sets of observations do not differ systematially from eah other, is rejeted at the 99% and 95% onfidene levels, respetively. 164 BIS Papers No 52

Table of Contents. Appendix II Application Checklist. Export Finance Program Working Capital Financing...7

Table of Contents. Appendix II Application Checklist. Export Finance Program Working Capital Financing...7 Export Finane Program Guidelines Table of Contents Setion I General...........................................................1 A. Introdution............................................................1

More information

Lemon Signaling in Cross-Listings Michal Barzuza*

Lemon Signaling in Cross-Listings Michal Barzuza* Lemon Signaling in Cross-Listings Mihal Barzuza* This paper analyzes the deision to ross-list by managers and ontrolling shareholders assuming that they have private information with respet to the amount

More information

AUDITING COST OVERRUN CLAIMS *

AUDITING COST OVERRUN CLAIMS * AUDITING COST OVERRUN CLAIMS * David Pérez-Castrillo # University of Copenhagen & Universitat Autònoma de Barelona Niolas Riedinger ENSAE, Paris Abstrat: We onsider a ost-reimbursement or a ost-sharing

More information

Tax-loss Selling and the Turn-of-the-Year Effect: New Evidence from Norway 1

Tax-loss Selling and the Turn-of-the-Year Effect: New Evidence from Norway 1 Tax-loss Selling and the Turn-of-the-Year Effet: New Evidene from Norway 1 Qinglei Dai Universidade Nova de Lisboa September 2005 1 Aknowledgement: I would like to thank Kristian Rydqvist at Binghamton

More information

PROCEEDS OF CRIME (BUSINESS IN THE REGULATED SECTOR) ORDER 2015

PROCEEDS OF CRIME (BUSINESS IN THE REGULATED SECTOR) ORDER 2015 Proeeds of Crime (Business in the Regulated Setor) Order 2015 Artile 1 Statutory Doument No. 2015/0073 Proeeds of Crime At 2008 PROCEEDS OF CRIME (BUSINESS IN THE REGULATED SECTOR) ORDER 2015 Approved

More information

university of illinois library AT URBANA-CHAMPAIGN BOOKSTACKS

university of illinois library AT URBANA-CHAMPAIGN BOOKSTACKS university of illinois library AT URBANA-CHAMPAIGN BOOKSTACKS CENTRAL CIRCULATION BOOKSTACKS The person harging this material is responsible for its renewal or its return to the library from whih it was

More information

A Theoretical Analysis of Credit Card Reform in Australia *

A Theoretical Analysis of Credit Card Reform in Australia * A Theoretial Analysis of Credit Card Reform in Australia * by Joshua S. Gans and Stephen P. King Melbourne Business Shool University of Melbourne First Draft: 12 th May, 2001 This Version: 5 th May, 2003

More information

Why issue bonds offshore?

Why issue bonds offshore? Why issue bonds offshore? Susan Black and Anella Munro 1 1. Introduction Bond markets in almost all currencies are becoming more internationalised (Table 1). 2 Internationalisation of bond markets should

More information

Fixed-income Securities Lecture 2: Basic Terminology and Concepts. Present value (fixed interest rate) Present value (fixed interest rate): the arb

Fixed-income Securities Lecture 2: Basic Terminology and Concepts. Present value (fixed interest rate) Present value (fixed interest rate): the arb Fixed-inome Seurities Leture 2: Basi Terminology and Conepts Philip H. Dybvig Washington University in Saint Louis Various interest rates Present value (PV) and arbitrage Forward and spot interest rates

More information

Globalization, Jobs, and Welfare: The Roles of Social Protection and Redistribution 1

Globalization, Jobs, and Welfare: The Roles of Social Protection and Redistribution 1 Globalization, Jobs, and Welfare: The Roles of Soial Protetion and Redistribution Priya Ranjan University of California - Irvine pranjan@ui.edu Current Draft Otober, 04 Abstrat This paper studies the welfare

More information

Findings and Recommendations

Findings and Recommendations Contrating Methods and Administration Findings and Reommendations Finding 9-1 ESD did not utilize a formal written pre-qualifiations proess for seleting experiened design onsultants. ESD hose onsultants

More information

Price-based versus quantity-based approaches for stimulating the development of renewable electricity: new insights in an old debate

Price-based versus quantity-based approaches for stimulating the development of renewable electricity: new insights in an old debate Prie-based versus -based approahes for stimulating the development of renewable eletriity: new insights in an old debate uthors: Dominique FINON, Philippe MENNTEU, Marie-Laure LMY, Institut d Eonomie et

More information

Optimal Sales Force Compensation

Optimal Sales Force Compensation Optimal Sales Fore Compensation Matthias Kräkel Anja Shöttner Abstrat We analyze a dynami moral-hazard model to derive optimal sales fore ompensation plans without imposing any ad ho restritions on the

More information

Suggested Answers, Problem Set 5 Health Economics

Suggested Answers, Problem Set 5 Health Economics Suggested Answers, Problem Set 5 Health Eonomis Bill Evans Spring 2013 1. The graph is at the end of the handout. Fluoridated water strengthens teeth and redues inidene of avities. As a result, at all

More information

State of Maryland Participation Agreement for Pre-Tax and Roth Retirement Savings Accounts

State of Maryland Participation Agreement for Pre-Tax and Roth Retirement Savings Accounts State of Maryland Partiipation Agreement for Pre-Tax and Roth Retirement Savings Aounts DC-4531 (08/2015) For help, please all 1-800-966-6355 www.marylandd.om 1 Things to Remember Complete all of the setions

More information

Agile ALM White Paper: Redefining ALM with Five Key Practices

Agile ALM White Paper: Redefining ALM with Five Key Practices Agile ALM White Paper: Redefining ALM with Five Key Praties by Ethan Teng, Cyndi Mithell and Chad Wathington 2011 ThoughtWorks ln. All rights reserved www.studios.thoughtworks.om Introdution The pervasiveness

More information

ru ILllYC UT 3 IMC IrrCRCIYLL3 AND SIMLARITIES BETWEEN CALIFORNIA AND h.tlnols

ru ILllYC UT 3 IMC IrrCRCIYLL3 AND SIMLARITIES BETWEEN CALIFORNIA AND h.tlnols ru ILllYC UT 3 IMC IrrCRCIYLL3 AND SIMLARITIES BETWEEN CALIFORNIA AND h.tlnols Foreward This paper outlines some of the signifiant differenes and similarities between the eletri power environments whih

More information

A Holistic Method for Selecting Web Services in Design of Composite Applications

A Holistic Method for Selecting Web Services in Design of Composite Applications A Holisti Method for Seleting Web Servies in Design of Composite Appliations Mārtiņš Bonders, Jānis Grabis Institute of Information Tehnology, Riga Tehnial University, 1 Kalu Street, Riga, LV 1658, Latvia,

More information

From the Invisible Handshake to the Invisible Hand? How Import Competition Changes the Employment Relationship

From the Invisible Handshake to the Invisible Hand? How Import Competition Changes the Employment Relationship From the Invisible Handshake to the Invisible Hand? How Import Competition Changes the Employment Relationship Marianne Bertrand, University of Chiago, Center for Eonomi Poliy Researh, and National Bureau

More information

Using Live Chat in your Call Centre

Using Live Chat in your Call Centre Using Live Chat in your Call Centre Otober Key Highlights Yesterday's all entres have beome today's ontat entres where agents deal with multiple queries from multiple hannels. Live Chat hat is one now

More information

The Optimal Deterrence of Tax Evasion: The Trade-off Between Information Reporting and Audits

The Optimal Deterrence of Tax Evasion: The Trade-off Between Information Reporting and Audits The Optimal Deterrene of Tax Evasion: The Trade-off Between Information Reporting and Audits Yulia Paramonova Department of Eonomis, University of Mihigan Otober 30, 2014 Abstrat Despite the widespread

More information

RESEARCH SEMINAR IN INTERNATIONAL ECONOMICS. Discussion Paper No. 475. The Evolution and Utilization of the GATT/WTO Dispute Settlement Mechanism

RESEARCH SEMINAR IN INTERNATIONAL ECONOMICS. Discussion Paper No. 475. The Evolution and Utilization of the GATT/WTO Dispute Settlement Mechanism RESEARCH SEMINAR IN INTERNATIONAL ECONOMICS Shool of Publi Poliy The University of Mihigan Ann Arbor, Mihigan 48109-1220 Disussion Paper No. 475 The Evolution and Utilization of the GATT/WTO Dispute Settlement

More information

Customer Efficiency, Channel Usage and Firm Performance in Retail Banking

Customer Efficiency, Channel Usage and Firm Performance in Retail Banking Customer Effiieny, Channel Usage and Firm Performane in Retail Banking Mei Xue Operations and Strategi Management Department The Wallae E. Carroll Shool of Management Boston College 350 Fulton Hall, 140

More information

Monetary Policy, Leverage, and Bank Risk-Taking

Monetary Policy, Leverage, and Bank Risk-Taking Monetary Poliy, Leverage, and Bank Risk-Taking Giovanni Dell Ariia IMF and CEPR Lu Laeven IMF and CEPR Otober 200 Robert Maruez Boston University Abstrat We provide a theoretial foundation for the laim

More information

AT 6 OF 2012 GAMBLING DUTY ACT 2012

AT 6 OF 2012 GAMBLING DUTY ACT 2012 i e AT 6 OF 2012 GAMBLING DUTY ACT 2012 Gambling Duty At 2012 Index i e GAMBLING DUTY ACT 2012 Index Setion Page PART 1 INTRODUCTORY 5 1 Short title... 5 2 Commenement... 5 3 General interpretation...

More information

Chapter 1 Microeconomics of Consumer Theory

Chapter 1 Microeconomics of Consumer Theory Chapter 1 Miroeonomis of Consumer Theory The two broad ategories of deision-makers in an eonomy are onsumers and firms. Eah individual in eah of these groups makes its deisions in order to ahieve some

More information

The B.E. Journal of Macroeconomics

The B.E. Journal of Macroeconomics The B.E. Journal of Maroeonomis Contributions Volume 7, Issue 2007 Artile 9 Nominal Debt Dynamis, Credit Constraints and Monetary Poliy Liam Graham Stephen Wright University College London, liam.graham@ul.a.uk

More information

The Advantages of Using Aountable Care Organizations ( ACOs)

The Advantages of Using Aountable Care Organizations ( ACOs) JLEO, V3 S i77 Struturing Inentives within Aountable Care Organizations Brigham Frandsen Brigham Young University James B. Rebitzer* Boston University Shool of Management and ational Bureau of Eonomi Researh

More information

Annual Return/Report of Employee Benefit Plan

Annual Return/Report of Employee Benefit Plan Form 5500 Department of the Treasury Internal Revenue Servie Department of Labor Employee Benefits Seurity Administration Pension Benefit Guaranty Corporation Annual Return/Report of Employee Benefit Plan

More information

Henley Business School at Univ of Reading. Pre-Experience Postgraduate Programmes Chartered Institute of Personnel and Development (CIPD)

Henley Business School at Univ of Reading. Pre-Experience Postgraduate Programmes Chartered Institute of Personnel and Development (CIPD) MS in International Human Resoure Management For students entering in 2012/3 Awarding Institution: Teahing Institution: Relevant QAA subjet Benhmarking group(s): Faulty: Programme length: Date of speifiation:

More information

Supply chain coordination; A Game Theory approach

Supply chain coordination; A Game Theory approach aepted for publiation in the journal "Engineering Appliations of Artifiial Intelligene" 2008 upply hain oordination; A Game Theory approah Jean-Claude Hennet x and Yasemin Arda xx x LI CNR-UMR 668 Université

More information

' R ATIONAL. :::~i:. :'.:::::: RETENTION ':: Compliance with the way you work PRODUCT BRIEF

' R ATIONAL. :::~i:. :'.:::::: RETENTION ':: Compliance with the way you work PRODUCT BRIEF ' R :::i:. ATIONAL :'.:::::: RETENTION ':: Compliane with the way you work, PRODUCT BRIEF In-plae Management of Unstrutured Data The explosion of unstrutured data ombined with new laws and regulations

More information

The foreign exchange and derivatives markets in Hong Kong

The foreign exchange and derivatives markets in Hong Kong The foreign exchange and derivatives markets in Hong Kong by the Banking Supervision Department The results of the latest triennial global survey of turnover in the markets for foreign exchange (FX) and

More information

AUSTRALIAN BANKS GLOBAL BOND FUNDING 1

AUSTRALIAN BANKS GLOBAL BOND FUNDING 1 AUSTRALIAN BANKS GLOBAL BOND FUNDING 1 Introduction Over the past decade, Australian banks have sourced a sizeable share of their funding in offshore markets. This article examines various aspects of these

More information

Economic and Antitrust Barriers to Entry

Economic and Antitrust Barriers to Entry Eonomi and Antitrust Barriers to Entry R. Preston MAfee, Hugo M. Mialon, and Mihael A. Williams 1 Deember 1, 2003 Abstrat We review the extensive literature on barriers to entry in law and eonomis; we

More information

Research Data Management ANONYMISATION

Research Data Management ANONYMISATION ANONYMISATION Sensitive Data Sensitive Data is information overing: The raial or ethni origin of the Data Subjet Politial opinions Religious or other beliefs of a similar nature Membership of trade unions

More information

The D.C. Long Term Disability Insurance Plan Exclusively for NBAC members Issued by The Prudential Insurance Company of America (Prudential)

The D.C. Long Term Disability Insurance Plan Exclusively for NBAC members Issued by The Prudential Insurance Company of America (Prudential) Plan Basis The D.C. Long Term Disability Insurane Plan Exlusively for NBAC members Issued by The Prudential Insurane Company of Ameria (Prudential) What does it over? The D.C. Long Term Disability Insurane

More information

Account Contract for Card Acceptance

Account Contract for Card Acceptance Aount Contrat for Card Aeptane This is an Aount Contrat for the aeptane of debit ards and redit ards via payment terminals, on the website and/or by telephone, mail or fax. You enter into this ontrat with

More information

THE TAX EXCLUSION FOR EMPLOYER-SPONSORED HEALTH INSURANCE

THE TAX EXCLUSION FOR EMPLOYER-SPONSORED HEALTH INSURANCE National Tax Journal, June 2,64 (2, Part 2), 5-53 THE TAX EXCLUSION FOR EMPLOYER-SPONSORED HEALTH INSURANCE Jonathan Gruber This paper reviews the issues raised by and the impats of the tax exlusion for

More information

prepayment / change of prepayment 1) Seafaring

prepayment / change of prepayment 1) Seafaring APPLICATION FOR PREPAYMENT AND FOR CHANGE IN WITHHOLDING TAX PERCENTAGE 2016 This form is for individual taxpayers, businesses or self-employed, farmers or partners in partnership for appliations for a

More information

A Comparison of Service Quality between Private and Public Hospitals in Thailand

A Comparison of Service Quality between Private and Public Hospitals in Thailand International Journal of Business and Soial Siene Vol. 4 No. 11; September 2013 A Comparison of Servie Quality between Private and Hospitals in Thailand Khanhitpol Yousapronpaiboon, D.B.A. Assistant Professor

More information

Market power and banking failures

Market power and banking failures International Journal of Industrial Organization 20 (2002) 1341 1361 www.elsevier.om/ loate/ eonbase a Market power and banking failures Ramon Caminal *, Carmen Matutes a, a,b Institut d Analisi ` Eonomia

More information

Capacity at Unsignalized Two-Stage Priority Intersections

Capacity at Unsignalized Two-Stage Priority Intersections Capaity at Unsignalized Two-Stage Priority Intersetions by Werner Brilon and Ning Wu Abstrat The subjet of this paper is the apaity of minor-street traffi movements aross major divided four-lane roadways

More information

Transfer of Functions (Isle of Man Financial Services Authority) TRANSFER OF FUNCTIONS (ISLE OF MAN FINANCIAL SERVICES AUTHORITY) ORDER 2015

Transfer of Functions (Isle of Man Financial Services Authority) TRANSFER OF FUNCTIONS (ISLE OF MAN FINANCIAL SERVICES AUTHORITY) ORDER 2015 Transfer of Funtions (Isle of Man Finanial Servies Authority) Order 2015 Index TRANSFER OF FUNCTIONS (ISLE OF MAN FINANCIAL SERVICES AUTHORITY) ORDER 2015 Index Artile Page 1 Title... 3 2 Commenement...

More information

A MESSAGE FROM THE CHAIRMAN...

A MESSAGE FROM THE CHAIRMAN... insurane brokers A MESSAGE FROM THE CHAIRMAN........... A MESSAGE FROM THE CHAIRMAN.......... Every single member of MKenzie Ross is part of a team, dediated to both our lients profession. Every single

More information

Board Building Recruiting and Developing Effective Board Members for Not-for-Profit Organizations

Board Building Recruiting and Developing Effective Board Members for Not-for-Profit Organizations Board Development Board Building Reruiting and Developing Effetive Board Members for Not-for-Profit Organizations Board Development Board Building Reruiting and Developing Effetive Board Members for Not-for-Profit

More information

Open and Extensible Business Process Simulator

Open and Extensible Business Process Simulator UNIVERSITY OF TARTU FACULTY OF MATHEMATICS AND COMPUTER SCIENCE Institute of Computer Siene Karl Blum Open and Extensible Business Proess Simulator Master Thesis (30 EAP) Supervisors: Luiano Garía-Bañuelos,

More information

SCHEME FOR FINANCING SCHOOLS

SCHEME FOR FINANCING SCHOOLS SCHEME FOR FINANCING SCHOOLS UNDER SECTION 48 OF THE SCHOOL STANDARDS AND FRAMEWORK ACT 1998 DfE Approved - Marh 1999 With amendments Marh 2001, Marh 2002, April 2003, July 2004, Marh 2005, February 2007,

More information

Retirement Option Election Form with Partial Lump Sum Payment

Retirement Option Election Form with Partial Lump Sum Payment Offie of the New York State Comptroller New York State and Loal Retirement System Employees Retirement System Polie and Fire Retirement System 110 State Street, Albany, New York 12244-0001 Retirement Option

More information

Optimal Health Insurance for Multiple Goods and Time Periods

Optimal Health Insurance for Multiple Goods and Time Periods Preliminary draft for review only 0R.P. Ellis, S. Jiang, and W.G.Manning MultipleGood_ 00630.dox June 30, 0 Optimal Health Insurane for Multiple Goods and Time Periods Randall P. Ellis a,, Shenyi Jiang

More information

protection p1ann1ng report

protection p1ann1ng report ( f1re protetion p1ann1ng report I BUILDING CONSTRUCTION INFORMATION FROM THE CONCRETE AND MASONRY INDUSTRIES NO. 15 OF A SERIES A Comparison of Insurane and Constrution Costs for Low-Rise Multifamily

More information

Static Fairness Criteria in Telecommunications

Static Fairness Criteria in Telecommunications Teknillinen Korkeakoulu ERIKOISTYÖ Teknillisen fysiikan koulutusohjelma 92002 Mat-208 Sovelletun matematiikan erikoistyöt Stati Fairness Criteria in Teleommuniations Vesa Timonen, e-mail: vesatimonen@hutfi

More information

Henley Business School at Univ of Reading. Chartered Institute of Personnel and Development (CIPD)

Henley Business School at Univ of Reading. Chartered Institute of Personnel and Development (CIPD) MS in International Human Resoure Management (full-time) For students entering in 2015/6 Awarding Institution: Teahing Institution: Relevant QAA subjet Benhmarking group(s): Faulty: Programme length: Date

More information

The Basics of International Trade: A Classroom Experiment

The Basics of International Trade: A Classroom Experiment The Basis of International Trade: A Classroom Experiment Alberto Isgut, Ganesan Ravishanker, and Tanya Rosenblat * Wesleyan University Abstrat We introdue a simple web-based lassroom experiment in whih

More information

Paid Placement Strategies for Internet Search Engines

Paid Placement Strategies for Internet Search Engines Paid Plaement Strategies for Internet Searh Engines Hemant K. Bhargava Smeal College of Business Penn State University 342 Beam Building University Park, PA 16802 bhargava@omputer.org Juan Feng Smeal College

More information

TRENDS IN EXECUTIVE EDUCATION: TOWARDS A SYSTEMS APPROACH TO EXECUTIVE DEVELOPMENT PLANNING

TRENDS IN EXECUTIVE EDUCATION: TOWARDS A SYSTEMS APPROACH TO EXECUTIVE DEVELOPMENT PLANNING INTERMAN 7 TRENDS IN EXECUTIVE EDUCATION: TOWARDS A SYSTEMS APPROACH TO EXECUTIVE DEVELOPMENT PLANNING by Douglas A. Ready, Albert A. Viere and Alan F. White RECEIVED 2 7 MAY 1393 International Labour

More information

THE UNIVERSITY OF TEXAS AT ARLINGTON COLLEGE OF NURSING. NURS 6390-004 Introduction to Genetics and Genomics SYLLABUS

THE UNIVERSITY OF TEXAS AT ARLINGTON COLLEGE OF NURSING. NURS 6390-004 Introduction to Genetics and Genomics SYLLABUS THE UNIVERSITY OF TEXAS AT ARLINGTON COLLEGE OF NURSING NURS 6390-004 Introdution to Genetis and Genomis SYLLABUS Summer Interession 2011 Classroom #: TBA and 119 (lab) The University of Texas at Arlington

More information

) ( )( ) ( ) ( )( ) ( ) ( ) (1)

) ( )( ) ( ) ( )( ) ( ) ( ) (1) OPEN CHANNEL FLOW Open hannel flow is haraterized by a surfae in ontat with a gas phase, allowing the fluid to take on shapes and undergo behavior that is impossible in a pipe or other filled onduit. Examples

More information

Entrepreneur s Guide. Starting and Growing a Business in Pennsylvania FEBRUARY 2015. newpa.com

Entrepreneur s Guide. Starting and Growing a Business in Pennsylvania FEBRUARY 2015. newpa.com Entrepreneur s Guide Starting and Growing a Business in Pennsylvania FEBRUARY 2015 newpa.om The Entrepreneur s Guide: Starting and Growing a Business in Pennsylvania was prepared by the Pennsylvania Department

More information

Product Warranties and Double Adverse Selection

Product Warranties and Double Adverse Selection rodut Warranties and Double Adverse eletion David A. oberman Assistant rofessor of Marketing INEAD Boulevard de Constane 77305 Fontainebleau Cede, Frane The author thanks rofessors Andy Mithell, Jak Mintz,

More information

(1.1) (7.3) $250m 6.05% US$ Guaranteed notes 2014 (164.5) Bank and other loans. (0.9) (1.2) Interest accrual

(1.1) (7.3) $250m 6.05% US$ Guaranteed notes 2014 (164.5) Bank and other loans. (0.9) (1.2) Interest accrual 17 Financial assets Available for sale financial assets include 111.1m (2013: 83.0m) UK government bonds. This investment forms part of the deficit-funding plan agreed with the trustee of one of the principal

More information

Hierarchical Clustering and Sampling Techniques for Network Monitoring

Hierarchical Clustering and Sampling Techniques for Network Monitoring S. Sindhuja Hierarhial Clustering and Sampling Tehniques for etwork Monitoring S. Sindhuja ME ABSTRACT: etwork monitoring appliations are used to monitor network traffi flows. Clustering tehniques are

More information

Deliverability on the Interstate Natural Gas Pipeline System

Deliverability on the Interstate Natural Gas Pipeline System DOE/EIA-0618(98) Distribution Category UC-950 Deliverability on the Interstate Natural Gas Pipeline System May 1998 This report was prepared by the, the independent statistial and analytial ageny within

More information

2012 Annual Report 11

2012 Annual Report 11 2012 Annual Report 2012 Annual Report 11 10 Simon Property Group, In. Simon Property Group Simon Property Group, In. (NYSE: SPG) is an S&P 100 ompany and the largest real estate ompany in the world. Our

More information

Provided in Cooperation with: Ifo Institute Leibniz Institute for Economic Research at the University of Munich

Provided in Cooperation with: Ifo Institute Leibniz Institute for Economic Research at the University of Munich eonstor www.eonstor.eu Der Open-Aess-Publikationsserver der ZBW Leibniz-Informationszentrum Wirtshaft The Open Aess Publiation Server of the ZBW Leibniz Information Centre for Eonomis Pagano, Maro; Immordino,

More information

Health Savings Account Application

Health Savings Account Application Health Savings Aount Appliation FOR BANK USE ONLY: ACCOUNT # CUSTOMER # Health Savings Aount (HSA) Appliation ALL FIELDS MUST BE COMPLETED. Missing fields may delay the aount opening proess and possibly

More information

INCOME TAX WITHHOLDING GUIDE FOR EMPLOYERS

INCOME TAX WITHHOLDING GUIDE FOR EMPLOYERS Virginia Department of Taxation INCOME TAX WITHHOLDING GUIDE FOR EMPLOYERS www.tax.virginia.gov 2614086 Rev. 07/14 * Table of Contents Introdution... 1 Important... 1 Where to Get Assistane... 1 Online

More information

Effectiveness of a law to reduce alcohol-impaired driving in Japan

Effectiveness of a law to reduce alcohol-impaired driving in Japan Effetiveness of a law to redue alohol-impaired driving in Japan T Nagata, 1,2 S Setoguhi, 3 D Hemenway, 4 M J Perry 5 Original artile 1 Takemi Program, Department of International Health, Harvard Shool

More information

An integrated optimization model of a Closed- Loop Supply Chain under uncertainty

An integrated optimization model of a Closed- Loop Supply Chain under uncertainty ISSN 1816-6075 (Print), 1818-0523 (Online) Journal of System and Management Sienes Vol. 2 (2012) No. 3, pp. 9-17 An integrated optimization model of a Closed- Loop Supply Chain under unertainty Xiaoxia

More information

INCOME TAX WITHHOLDING GUIDE FOR EMPLOYERS

INCOME TAX WITHHOLDING GUIDE FOR EMPLOYERS Virginia Department of Taxation INCOME TAX WITHHOLDING GUIDE FOR EMPLOYERS www.tax.virginia.gov 2614086 Rev. 01/16 Table of Contents Introdution... 1 Important... 1 Where to Get Assistane... 1 Online File

More information

(b) no moneys forming a part of any such fund shall be invested in any investments other than such as are expressly authorized herein.

(b) no moneys forming a part of any such fund shall be invested in any investments other than such as are expressly authorized herein. at any time held in the Debt Servie Fund may be invested only in Federal Obligations having stated maturities, or being redeemable at the option of the holder thereof at a stated prie and time, not later

More information

Procurement auctions are sometimes plagued with a chosen supplier s failing to accomplish a project successfully.

Procurement auctions are sometimes plagued with a chosen supplier s failing to accomplish a project successfully. Deision Analysis Vol. 7, No. 1, Marh 2010, pp. 23 39 issn 1545-8490 eissn 1545-8504 10 0701 0023 informs doi 10.1287/dea.1090.0155 2010 INFORMS Managing Projet Failure Risk Through Contingent Contrats

More information

Deadline-based Escalation in Process-Aware Information Systems

Deadline-based Escalation in Process-Aware Information Systems Deadline-based Esalation in Proess-Aware Information Systems Wil M.P. van der Aalst 1,2, Mihael Rosemann 2, Marlon Dumas 2 1 Department of Tehnology Management Eindhoven University of Tehnology, The Netherlands

More information

BENEFICIARY CHANGE REQUEST

BENEFICIARY CHANGE REQUEST Poliy/Certifiate Number(s) BENEFICIARY CHANGE REQUEST *L2402* *L2402* Setion 1: Insured First Name Middle Name Last Name Permanent Address: City, State, Zip Code Please hek if you would like the address

More information

WORKFLOW CONTROL-FLOW PATTERNS A Revised View

WORKFLOW CONTROL-FLOW PATTERNS A Revised View WORKFLOW CONTROL-FLOW PATTERNS A Revised View Nik Russell 1, Arthur H.M. ter Hofstede 1, 1 BPM Group, Queensland University of Tehnology GPO Box 2434, Brisbane QLD 4001, Australia {n.russell,a.terhofstede}@qut.edu.au

More information

How To Understand The New Zealand Corporate Bond Market

How To Understand The New Zealand Corporate Bond Market The New Zealand corporate bond market Simon Tyler 1 Reserve Bank of New Zealand Introduction The paper explains how the domestic corporate bond market operates in New Zealand today, and outlines the form

More information

$600,000,000. UBS PaineWebber Inc. NEW ISSUE

$600,000,000. UBS PaineWebber Inc. NEW ISSUE NEW ISSUE $600,000,000 Student Loan onsolidation enter Student Loan Trust I Student Loan Asset-Backed Notes (Auction Rate ertificates ARs ) Stated Maturity Date: March 1, 2042 Student Loan onsolidation

More information

The International Certificate in Banking Risk and Regulation (ICBRR)

The International Certificate in Banking Risk and Regulation (ICBRR) The International Certificate in Banking Risk and Regulation (ICBRR) The ICBRR fosters financial risk awareness through thought leadership. To develop best practices in financial Risk Management, the authors

More information

INDUSTRIAL AND COMMERCIAL BANK OF CHINA ICBC: Your Global Portal to RMB Market. July 2012

INDUSTRIAL AND COMMERCIAL BANK OF CHINA ICBC: Your Global Portal to RMB Market. July 2012 ICBC: Your Global Portal to RMB Market July 2012 Content General Introduction Investment in RMB Services Solution 1 General Introduction to Renminbi (RMB) RMB Renminbi (commonly abbreviated as RMB) is

More information

Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U.S. Branches for United States Tax Withholding and Reporting

Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U.S. Branches for United States Tax Withholding and Reporting Form W-8MY (Rev. April 2014) Department of the Treasury nternal Revenue Servie Do not use this form for: A A A Certifiate of Foreign ntermediary, Foreign Flow-Through Entity, or Certain U.S. Branhes for

More information

ADULTS SERVICES KNOWLEDGE REVIEW 13. Outcomes-focused services for older people

ADULTS SERVICES KNOWLEDGE REVIEW 13. Outcomes-focused services for older people ADULTS SERVICES KNOWLEDGE REVIEW 13 Outomes-foused servies for older people ADULTS SERVICES KNOWLEDGE REVIEW 13 Outomes-foused servies for older people Caroline Glendinning, Sue Clarke, Phillipa Hare,

More information

i e AT 21 of 2006 EMPLOYMENT ACT 2006

i e AT 21 of 2006 EMPLOYMENT ACT 2006 i e AT 21 of 2006 EMPLOYMENT ACT 2006 Employment At 2006 Index i e EMPLOYMENT ACT 2006 Index Setion Page PART I DISCRIMINATION AT RECRUITMENT ON TRADE UNION GROUNDS 9 1 Refusal of employment on grounds

More information

Exempt Organization Business Income Tax Return

Exempt Organization Business Income Tax Return Form For alendar year 2013 or other tax year beginning, and ending. 34 Unrelated business taxable. Subtrat line 33 from line 32. If line 33 is greater than line 32, enter the smaller of zero or line 32

More information

Understanding Fixed Income

Understanding Fixed Income Understanding Fixed Income 2014 AMP Capital Investors Limited ABN 59 001 777 591 AFSL 232497 Understanding Fixed Income About fixed income at AMP Capital Our global presence helps us deliver outstanding

More information

Granular Problem Solving and Software Engineering

Granular Problem Solving and Software Engineering Granular Problem Solving and Software Engineering Haibin Zhu, Senior Member, IEEE Department of Computer Siene and Mathematis, Nipissing University, 100 College Drive, North Bay, Ontario, P1B 8L7, Canada

More information

Disability Discrimination (Services and Premises) Regulations 2016 Index DISABILITY DISCRIMINATION (SERVICES AND PREMISES) REGULATIONS 2016

Disability Discrimination (Services and Premises) Regulations 2016 Index DISABILITY DISCRIMINATION (SERVICES AND PREMISES) REGULATIONS 2016 Disability Disrimination (Servies and Premises) Regulations 2016 Index DISABILITY DISCRIMINATION (SERVICES AND PREMISES) REGULATIONS 2016 Index Regulation Page 1 Title... 3 2 Commenement... 3 3 Interpretation...

More information

SupermarketPricingStrategies

SupermarketPricingStrategies SupermarketPriingStrategies PaulB.Ellikson Duke University SanjogMisra University of Rohester November 13, 2006 Abstrat Most supermarket firms hoose to position themselves by offering either Every Day

More information

protection p1ann1ng report

protection p1ann1ng report f1re~~ protetion p1ann1ng report BUILDING CONSTRUCTION INFORMATION FROM THE CONCRETE AND MASONRY INDUSTRIES Signifiane of Fire Ratings for Building Constrution NO. 3 OF A SERIES The use of fire-resistive

More information

Strategies for Development and Adoption of ERR in German Ambulatory Care

Strategies for Development and Adoption of ERR in German Ambulatory Care Strategies for Development and Adoption of ERR in German Ambulatory Care Sebastian Duennebeil 1, Ali Sunyaev 1, Jan Maro Leimeister 2, Helmut Krmar 1 1 Department of Informatis 1 Tehnishe Universitat MUnhen

More information

An Enhanced Critical Path Method for Multiple Resource Constraints

An Enhanced Critical Path Method for Multiple Resource Constraints An Enhaned Critial Path Method for Multiple Resoure Constraints Chang-Pin Lin, Hung-Lin Tai, and Shih-Yan Hu Abstrat Traditional Critial Path Method onsiders only logial dependenies between related ativities

More information

NASDAQ Commodity Index Methodology

NASDAQ Commodity Index Methodology NASDAQ Commodity Index Methodology January 2016 1 P a g e 1. Introdution... 5 1.1 Index Types... 5 1.2 Index History... 5 1.3 Index Curreny... 5 1.4 Index Family... 6 1.5 NQCI Index Setors... 6 2. Definitions...

More information

New data on financial derivatives 1 for the UK National Accounts and Balance of Payments

New data on financial derivatives 1 for the UK National Accounts and Balance of Payments New data on financial derivatives 1 for the UK National Accounts and Balance of Payments By Andrew Grice Tel: 020 7601 3149 Email: mfsd_fmr@bankofengland.co.uk This article introduces the first publication

More information

Working Paper Deriving the Taylor principle when the central bank supplies money

Working Paper Deriving the Taylor principle when the central bank supplies money eonstor www.eonstor.eu Der Open-Aess-Publikationsserver der ZBW Leibniz-Informationszentrum Wirtshaft The Open Aess Publiation Server of the ZBW Leibniz Information Centre for Eonomis Davies, Ceri; Gillman,

More information

Information Security 201

Information Security 201 FAS Information Seurity 201 Desktop Referene Guide Introdution Harvard University is ommitted to proteting information resoures that are ritial to its aademi and researh mission. Harvard is equally ommitted

More information

i e AT 8 of 1938 THE PERSONAL INJURIES (EMERGENCY PROVISIONS) ACT 1939

i e AT 8 of 1938 THE PERSONAL INJURIES (EMERGENCY PROVISIONS) ACT 1939 i e AT 8 of 1938 THE PERSONAL INJURIES (EMERGENCY PROVISIONS) ACT 1939 The Personal Injuries (Emergeny Provisions) At 1939 Index i e THE PERSONAL INJURIES (EMERGENCY PROVISIONS) ACT 1939 Index Setion

More information

Why has FX trading surged? Explaining the 2004 triennial survey 1

Why has FX trading surged? Explaining the 2004 triennial survey 1 Gabriele Galati +41 61 280 8923 gabriele.galati@bis.org Michael Melvin +1 480 965 6860 mmelvin@asu.edu Why has FX trading surged? Explaining the 2004 triennial survey 1 The 2004 survey shows a surge in

More information

Trade Information, Not Spectrum: A Novel TV White Space Information Market Model

Trade Information, Not Spectrum: A Novel TV White Space Information Market Model Trade Information, Not Spetrum: A Novel TV White Spae Information Market Model Yuan Luo, Lin Gao, and Jianwei Huang 1 Abstrat In this paper, we propose a novel information market for TV white spae networks,

More information

In many services, the quality or value provided by the service increases with the time the service provider

In many services, the quality or value provided by the service increases with the time the service provider MANAGEMENT SCIENCE Vol. 57, No. 1, January 2011, pp. 40 56 issn 0025-1909 eissn 1526-5501 11 5701 0040 informs doi 10.1287/mns.1100.1250 2011 INFORMS Quality Speed Conundrum: Trade-offs in Customer-Intensive

More information

Foreign Currency Exposure and Hedging in Australia

Foreign Currency Exposure and Hedging in Australia Foreign Currency Exposure and Hedging in Australia Anthony Rush, Dena Sadeghian and Michelle Wright* The 213 Australian Bureau of Statistics (ABS) Foreign Currency Exposure survey confirms that Australian

More information

FOOD FOR THOUGHT Topical Insights from our Subject Matter Experts

FOOD FOR THOUGHT Topical Insights from our Subject Matter Experts FOOD FOR THOUGHT Topial Insights from our Sujet Matter Experts DEGREE OF DIFFERENCE TESTING: AN ALTERNATIVE TO TRADITIONAL APPROACHES The NFL White Paper Series Volume 14, June 2014 Overview Differene

More information