Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/153381 
Year of Publication: 
2008
Series/Report no.: 
ECB Working Paper No. 947
Publisher: 
European Central Bank (ECB), Frankfurt a. M.
Abstract: 
Using count-data techniques, this paper studies the determinants of currency choice in the issuance of foreign-currency-denominated bonds. In particular, we investigate whether bond issuers choose their issuance currency in order to exploit the borrowing-cost savings associated with deviations from uncovered and covered interest parity. Our sample includes issuers from both the public sector and private sector. Our findings show that the choice of issuance currency is sensitive to deviations from uncovered interest parity but insensitive, in general, to deviations from covered interest parity. Furthermore, the influence of deviations from uncovered interest parity is stronger for financial issuers than for nonfinancial issuers.
Subjects: 
bonds
currency choice
foreign exchange
interest-rate parity
international debt securities
JEL: 
F31
F36
G14
G15
G32
Document Type: 
Working Paper

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