Are the proceeds Tier 1 or 2 capital (if at all) and Do banks have any incentives to underwrite bonds as compared to participating in syndicated loans or other forms of international debt.If a bank underwrites an international bond issue (eurobonds) how does this reflect on its capital adequacy?
By underwriting a bond issue the bank is effectively acting as a guarantor if the bond offering isnt fully subscribed, this can leave it exposed as the bond price is likely to drop, to offset this the banks charge a nice premium for taking on this risk.
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