NuclearPhynance Archive

What advantages do governments/agencies/states have in issuing EMTNs ? Besides the MTN shelf-registration rule, how does the fact that ETMNs can be issued in different currencies help govts ? Do they use the funds for their foreign reserve accounts and currency manipulation ?



Say that we're in BlowCool country and BlowCool managed to balance their budget this yr, but there are the pesky Debt Retirements/Redemptions and some other petty shit to fund, so BlowCool Finance guys have to borrow. How will issuing ETMNs be an advantage over and above issuing, say regular MTNs denominated in BlowCool dollars ?



Oh, any primers on ETMNs will be appreciated as well.



Thanks amigos.

Carter bonds

tap a different investor base, and take advantage of funding arbitrages (swap back into BCDs at lower cost of funds than issuing domestically, which could open up from time to time or exist structurally, depending on credit spreads in foreign currency and basis swap

Almost all issuers with EMTN programmes, regardless of whether they are corporates, financials, or sovereign/supranational issuers, utilize them to respond to specific investor demand. In other words, they can be considered as a 'pull' instrument as opposed to a 'push' instrument. The issuers respond to request by dealers, who talk to investors across the globe with specific demands, and create bespoke securities - upon investors wishes - which the EMTN issuers almost always hedge back to their (own) target/benchmark currency (and on top of that almost always back to floating/Libor). This is what is typically called 'reverse inquiry', and is what drives 98% of the EMTN market. By responding to these reverse inquiries, as opposed to issuing directly in their benchmark currency (and/or domestic market), they typically achieve a more attractive all-in funding cost. This arbitrage saving ranges between issuers and the type of security issued, but is typically in the order of 5-25bps.

AndyM, gretzky99: thanks guys. Fantastic first post gretzky99 ! That a play on the hockey legend ?

It sure is....but not that I any way consider my own achievements (on or off the ice) as anything resembling his pedigree