You may have seen articles about Kangaroo bonds in the financial press recently … but perhaps you aren’t too sure what they are, who would be issuing them, or why. In this topic, we explore what may, at first glance, appear to be complex financial instruments, but which are, in fact, a quite straightforward means of borrowing and investing money.
We round out the topic by considering the development of ‘green bonds’, and ask you to reflect on whether these relatively new bonds could be considered as a not only ethical, but perhaps also revolutionary, means of financing the transition to a low emission, less carbon intensive economy.
- Describe what a Kangaroo bond is and how it differs from other types of corporate bonds
- Outline the approximate size of the Kangaroo bond market and some of the reasons behind its recent growth
- Identify the types of borrowers that issue Kangaroo bonds into the Australian bond market and the types of investors that purchase these bonds
- Discuss the factors that make it attractive for foreign corporations to issue Kangaroo bonds
- Explain how the use of cross-currency basis swaps can reduce the risk of issuing Kangaroo bonds and allow borrowers to achieve funding costs that are more favourable than in their own domestic market
- Illustrate how a cross-currency basis swap works using a major company as an example
- Explain why green bonds are becoming popular and the ethical benefits behind their issuance.
Looking for a RG146 CPD solution? This course also forms part of our complete online CPD solution, , which enables financial participants and organisations to meet ASICs RG 146 ongoing training requirements.