The international Bonds markets is a platform whereby the flow of funds between the borrowers for long-run funds and long-term investors who supplies funds is facilitated. There are two main types of bonds that Shoprite can use the foreign bonds or the Eurobonds. Foreign bonds can be defined as bonds that are issued by a global borrower and sold to investors in countries with currencies other than the currency in which the bond is denominated while Eurobonds are issued in a host country’s bonds market, in the host country’s currency, by a foreign borrower. This bond is subjected to the protocols enacted on all securities traded in the national market and sometimes to special regulations and disclosure requirements governing foreign borrowers. Many of these issues have flamboyant names such as Yankee bonds: dollar-denominated bonds which are issued by non-American borrowers in the U.S. market, Samurai bonds: yen-denominated bonds which are issued by non-Japanese borrowers in the Japanese market, Bulldog bonds: pound sterling-denominated bonds which are issued by non-British borrowers in the British market, Heidi bonds: franc-denominated bonds which are issued by non-Swiss borrowers in the Swiss market, Rembrandt bonds: guilder (now euro)-denominated bonds which are issued by non-Dutch borrowers in the Dutch market and Matador bonds: peseta (now euro)-denominated bonds which are issued by non-Spanish borrowers in the Spanish market. Functions of the International Bonds Market Shoprite can use the international bonds markets for diverse purposes during expansion in foreign markets. Firstly, Shoprite can issue bonds in foreign markets as it can attract a bigger and richer customer base rather in its domestic region. Therefore, havin... ... middle of paper ... ...rates in order to attract more potential bondholders and hence higher interest rate costs. Even though, the bonds have high interest rate, the face-value of the bonds have to be repaid eventually on the maturity date. This can be difficult for Shoprite if the foreign expansion has not been a successful performance and therefore no revenue generated. This may lead to a spiral of loans till Shoprite closes down. Competitive Advantage However the disadvantages of utilizing the bond markets can be avoided if the bonds management is efficient taking into consideration several changing aspects of the world economic and financial conditions. Moreover, the advantages of using the international bonds market outweigh the potential problems for Shoprite as it presents numerous competitive advantage compared to Pick n Pay or Walmart as described is the advantages section.
Sovereign lending, throughout history, has been marked by occurrences of partial default and repudiation by governments of all kind; from medieval princes to dictators to democratic regimes. In the 1970s lending to lesser-developed countries led to the rescheduling and partial defaults in the 1980s. Even the sustainability of the debt of nations such as Belgium, Canada, Italy and even the United States is not free from suspect.
Also, the usage of high yield bonds securities for financing became popular during the 1990s in foreign markets such as Latin America, Asia, and Europe showing the rise in international appeal for these kinds of securities. However, outside of the U.S the high yield market has taken a longer time to become popular and thus there is still room for the development of high yield bonds within financial markets in emerging countries. It is safe to determine that the market for high-yield bonds will always be in existence since it is a viable alternative for many fast growing firms to acquire financing and is a rewarding option for investors. The key to the still growing, strong market demand for high yield bonds is based on linking the [U.S.] economy’s constant desire for capital with investors’ desire for higher returns on their investment.
However, financial situation of the firm plays a very important role in the decision of the bondholder and this company has been one of the most profitable companies America in terms of ROE, ROA ad gross profit margin. Apart from decrease in earnings and cash flow in 1997, UST had continuous increases in sales (10-year compound annual growth rate of 9%), earnings (11%) and cash flow (12%). They are generating their cash flows out of the operations. Thanks to their premium pricing, they are achieving more than average gross profit margin. So, over the years UST's revenues are stable and positive, and generally its statements are positive. The company does not have any problems with its cash flow.
What is a bond? Bonds are often considered by investors to be “financial IOU's.” Frequently, bonds are issued from banks designed for quick, upfront cash used in lending purposes, such as loans. When purchasing a bond, the buyer pays an upfront sum of money to the seller. By the terms and conditions...
As financial consultants, we have been asked by Walt Disney’s management to provide an evaluation of this alternative to the company for this financing decision. For this estimate, we have reviewed the data of the Consolidated Income Statements from 1982 to 1983, the Consolidated Balance Sheets of 1984 and 1983, the Historical Summary of Average Yen/Dollar Exchange Rates and Price Indexes, ECU/Yen Swap flows in the following ten years, Yen Long-dated foreign exchange forward, Cash flow of 10-year ECU Euro bonds with sinking fund (Exhibit 6), and also the list of the French Utility’s outstanding publicly Traded Eurobonds.
Bonds and Equities Defining Bonds and Equities Bonds are certificates of obligation or indebtedness, issued by governments and companies to raise funds repayable at interest over relatively long periods. Equities are investments exercised by purchasing a share in the ownership of a corporation; and are more commonly called stocks or shares (as in the stock market or share market). Bonds have a very favorable relationship with equities. Historically, when equity markets fell, bonds had gone up in value, partially offsetting the fall. When equity markets rise, interestingly, high quality bonds also tend to rise, although to a lesser extent. Therefore for an investor with equity portfolio wanting to reduce portfolio volatility or make the portfolio less susceptible to a fall in equity markets bonds are the most appropriate. Bonds generally pay a much higher income than high quality government and corporate bonds to compensate for higher risk. Similar to equities, bonds tend to perform best when economic growth is strong with low stable interest rates. In such an environment the ability of these companies to pay interest and repay their bonds on the maturity date is greatly enhanced. [Z. Bodie, 2000] Investment in bonds and equities, usually via stock-markets and other exchanges for financial instruments. So-called "portfolio investment" is usually relatively easy to re-sell; hence this type of investment can flow relatively easily into and out of a country's stock-markets. This can lead to volatility in share-prices and levels of capital availability. What’s the difference? Equities are shares listed on the stock exchange. Their prices are influenced by the underlying performance of the companies, the sectors in which they operate ...
Some investors are wary about the process of investing internationally, carrying the concept that it is always to precarious and complex. While there are risks involved with international investing, there are also very beneficial and profitable reasons for doing so. Ev...
Starbucks’ solvency ratios provide valuable insight into whether the company is generating sufficient cash flow to meet short-term and long-term obligations. At the end of 2014, Starbucks current assets of $4169 million and current liabilities of $3039 million produced a current ratio of 1.37. During this same period, Starbucks had quick assets of $2474 million (cash of $1708 million + short-term investments of $135 million + accounts receivable of $631 million) with current liabilities of $3039 million resulting in a quick ratio of 0.81. These ratios imply that Starbucks was reasonably liquid at the end of 2014 with $1.37 in current assets and $0.81 in quick assets for every $1 in current liabilities. In 2013, Starbucks had a current ratio of 1.02 and a quick ratio of 0.71 and the previous year the company’s current ratio was 1.90 with a quick ratio of 1.14. This data shows that Starbucks’ current ratio and quick ratio decreased considerably from 2012 to 2013 indicating a reduction in liquidity. Starbucks liabilities increased dramatically in 2013 because of an accrued
Investing or venturing into the international market involves critical analysis of the internal and external environment in which the company operates. Usually, a company will decide to venture internationally due to a saturated market or fierce competition in the current country of operation. The demand for a company’s products may have diminished as a result of an economic crisis thus the company will target a foreign market to sustain its sales. In other words, the firms expand internationally to seek new customers for its products. For example, the current Euro zone crisis led to low demand in Europe and many companies extended their businesses to emerging markets where demand was high. A company may also venture in the international market to enhance the cost-effectiveness of its operations especially for manufacturing companies that will benefit from low costs of production in developing world. Global expansion is a long term project as it involves demanding logistics to be successful. Thorough research must be undertaken to ensure that the expansion will create value for share...
Bonds are debt obligation with long-term maturities. The issuer of bonds agrees to make payments of interest (or coupon) and principal on a specific date to the bondholders. Bonds are commonly issued by Malaysia government, licensed banks which are under Banking and Financial Institutions Act 1989, Islamic banks which are under Islamic Banking Act 1983, National Mortgage Corporation of Malaysia, and listed companies. The aim of those institutions is to obtain long-term funds. Bonds are normally offered to the public and actually sold to many different investors. E.g. financial institutions and securities corporation that wish to invest funds for long term period
7-Eleven employed adapted global marketing, but continued to open stores in more countries. 7-Eleven has adjusted their marketing strategy for each of the international markets they are targeting, which in turn has helped them gain a larger portion of the market. 7-Eleven has benefited by this due to them being a premier player in the market for as long as they have. People love that 7-Eleven has items that are tailored to their desires. This example of extreme localization has helped them gain a competitive advantage over their
Kantar Retail and Coca-Cola Research Council published a report on emerging markets, which stated that although large international retailers were affected by the global economic crisis, which reduced the cash available for funding their expansion, the conservative economies of emerging markets protected many of the financial institutions there.
2. SEVEN-ELEVEN'S SUPPLY CHAIN STRATEGY IN JAPAN CAN BE DESCRIBED AS ATTEMPTING TO MICRO-MATCH SUPPLY AND DEMAND USING RAPID REPLENISHMENT. WHAT ARE SOME RISKS ASSOCIATED WITH THIS CHOICE?
International Marketing, at its simplest level, involves the firm making one or more marketing mix decisions across national boundaries (Jobber, 2010). At its most complex level, it involves the firm establishing manufacturing facilities overseas and coordinating marketing strategies across the globe (Jobber, 2010). There are various reasons for going global, some of which are: to find opportunities beyond saturated domestic markets; to seek expansion beyond small, low growth domestic markets; to meet customers’ expectations; to respond to the competitive forces for example the desire to attack an overseas competitor; to act on cost factor for example to gain economies of scale in order to achieve a balanced growth portfolio. The methods of market entry that could be used are indirect exporting (for example, using domestic –based export agents), direct exporting (for example, foreign –based distributors), licensing, joint venture and direct investment. I found this par...
Bonds have a number of characteristics that differentiate one issue from another. We are going to define and describe a number of characteristics in detail below.