FRN in different currencies

toronto · August 17th, 2006, 1:09 pm

When one company issue FRN in one country (local currency), why its spread is different if issue FRN in another country in another currency?is it possible? how does it happen?

cemil · August 17th, 2006, 1:30 pm

Because you have not the same risk in each currencies and rates. If the yield was the same in each currency, you can arbitrage them.

mapleleafs · August 17th, 2006, 11:05 pm

how can arbitrage if same yield?

Lepperbe · August 18th, 2006, 3:59 am

QuoteOriginally posted by: torontoWhen one company issue FRN in one country (local currency), why its spread is different if issue FRN in another country in another currency?is it possible? how does it happen?Preference of local investors (who know company better, and usually willing to accept lower spread) for local currency paper.Used to be quite a big spread between Australian company bonds issued in A$ and Euro. (don't follow that market anymore, so don't know if it still persists but would imagine so).