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| Author: | McBrady, M.R. Schill, M.J. |
| Title: | Foreign currency-denominated borrowing in the absence of operating incentives |
| Journal: | Journal of Financial Economics
2007 : OCT, VOL. 86:1, p. 145-177 |
| Index terms: | finance foreign debts currency interest rates capital structure of companies policy |
| Language: | eng |
| Abstract: | Corporations issue foreign currency-denominated (hereafter as: f-c-dtd.) debt to hedge foreign currency (here as: f-c.) cash flows with offsetting interest payments. This paper tests an alternative "opportunistic" motive for foreign f-c-dtd. borrowing by constructing a comprehensive sample of f-c-dtd. bonds issued by sovereign government and agency issuers with no f-c. cash flows or foreign operations. Among others, there is found strong and consistent evidence that the borrowers in this study's sample consider cross-currency differences in covered and uncovered interest yields in choosing the currency in which to denominate their international debt etc. |
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