This research examines the Eurobond market in the spring of 1990. Included in this research is an assessment of Euro bond activity in the decade of the 1980s. While this assess ment relies on statistical data, another goal of this research cannot. The second goal of this research is to predict the future of the Eurobond market. Past performance will not likely be the determining factor for the future of the Eurobond market ("The Unspoken Question: Eurobond Market, Is This Good bye?" 1989).
EUROBOND MARKET PERFORMANCE IN THE 1980S
Eurobond issues rose to record high levels in 1989, to US$253.9 billion ("International Bond Issues Rose 12% in '89, OECD Says," 1990). This growth occurred in a year in which total borrowing on international capital markets declined ("International Bond Issues Rose 12% in '89, OECD Says," 1990). Performance at that level certainly would not appear to charac terize a market in trouble; however, looks can be deceiving.
New Eurobond issues were led by bonds with equity war rants, and 97 percent of equity warrant bonds were issued by Japanese firms ("International Bond Issues Rose 12% in '89, OECD Says," 1990). Absolute dominance of one sector of an
1 2international financial market by players from a single country is not a healthy situation.
In 1989, Eurobonds denominated in American dollars and the Japanese yen were up ("International Bond Issues Rose 12% in '89, OECD Says," 1990). Conversely, those denominated in Deutschmarks and the Swiss franc were off from year earlier levels ("International Bond Issues Rose 12% in '89, OECD Says," 1990). Rising interest rates in Germany and Switzerland hurt the mark and franc denominated bonds ("International Bond Issues Rose 12% in '89, OECD Says," 1990).
A new denomination currency attracting wide interest in the Eurobond market is the ECU European Currency Unit (Lewis, 1989). In the summer of 1978, the member countries of the European Commu...