GERMANYA EUROMONEY SURVEY - June 1996DEUTSCHMARK EUROBONDSHistorical rootsIn the last few years the Deutschmark bond market has gained increasing importance as an attractive investment alternative to the US dollar bond market for many international investors. The Euro-Deutschmark bond market has steadily increased its market share over the years. The Deutschmark is now the second most important reserve currency. This process has not been only triggered by the secular trend of Deutschmark appreciation versus the major currencies but also due to a switch of the Bundesbank's market regulation policy to an attitude which is much more investor-oriented than in earlier years. In the last 10 years, the Bundesbank has abolished many obstacles which had reduced the attractiveness of the Deutschmark-denominated Eurobond markets for foreign issuers and investors. In 1985 the Bundesbank allowed German-based subsidiaries of foreign banks to lead manage Eurodeutschmark bond issues and opened the market to more innovative debt instruments such as FRNs, zero-coupon and dual-currency bonds. Since 1989, the Bundesbank no longer requires lead managers to inform it ahead of a planned issue, paving the way for issues on a standby basis such as medium-term notes and commercial paper programmes. |