Carrefour S.A. Harvard Case Solution & Analysis

In August 2002, the French retail giant Carrefour SA is considering alternative currency to raise (euro) EUR750 million Eurobond market. Carrefour investment bankers believe that the bonds can be issued at 5.25% in euros, 5.375% in GBP, 3.625% in Swiss francs and 5.5% in U.S. dollars. Despite the high nominal coupon rate and the lack of physical activity in the UK, the British pound question appears to provide the lowest cost of funds. This event was designed to introduce topics in international finance, such as interest rate parity, currency risk management, and in the Eurobond market. Students are instructed to find out why the forward-exchange rates vary from spot rates and propose a strategy of Eurobonds to finance Carrefour.
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by Michael J. Schill Source: Darden School of Business 10 pages. Publication Date: June 8, 2005. Prod. #: UV0283-PDF-ENG

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