The Role of Foreign Bond Issuance

The Case of Australia

Jonathan A. Batten*, Warren P. Hogan, Peter G. Szilagyi

*Corresponding author for this work

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

We examined the recent development of the foreign bond-termed Kangaroo bond-market in Australia. Overwhelmingly, issuers in this market are of high credit quality and comprise sovereign, supranational and major international financial institutions. Local institutional investors have a preference for simple, fixed-rate pricing structures, with foreign issuers reliant upon converting their Australian dollar-denominated bond proceeds into the currency and coupon type of choice using cross-currency swaps. The Kangaroo bond issuers provide a natural counterparty to Australian residents issuing in foreign currency in offshore markets, where cross-currency swaps allow them to easily convert their proceeds into Australian dollars.

Original languageEnglish
Pages (from-to)36-50
Number of pages15
JournalAustralian Economic Review
Volume44
Issue number1
DOIs
Publication statusPublished - Mar 2011

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