Global Sales, International Currencies and the Currency Denomination of Debt

54 Pages Posted: 22 Mar 2021 Last revised: 20 Oct 2022

See all articles by Ric Colacito

Ric Colacito

University of North Carolina Kenan-Flagler Business School; NBER

Yan Qian

University of North Carolina at Chapel Hill

Andreas Stathopoulos

University of North Carolina (UNC) at Chapel Hill

Date Written: September 30, 2022

Abstract

We document that the currency denomination of the debt of large firms in developed countries is strongly associated with the geographical distribution of their sales. Furthermore, those firms exhibit significant home currency bias and international currency bias in debt issuance: controlling for the geography of sales, they borrow more in their home currency and the two most traded currencies, the US dollar and the euro. International currency bias is more pronounced for bonds, consistent with the skew of global investors towards bonds denominated in US dollars and euros. Finally, we find that the euro bias in debt issuance has strengthened in the decade following the global financial crisis.

Keywords: International bonds, exchange rates

JEL Classification: F31, F34, G12

Suggested Citation

Colacito, Riccardo and Qian, Yan and Stathopoulos, Andreas, Global Sales, International Currencies and the Currency Denomination of Debt (September 30, 2022). Available at SSRN: https://ssrn.com/abstract=3762278 or http://dx.doi.org/10.2139/ssrn.3762278

Riccardo Colacito (Contact Author)

University of North Carolina Kenan-Flagler Business School ( email )

Kenan-Flagler Business School
Chapel Hill, NC 27599-3490
United States

HOME PAGE: http://drric.web.unc.edu/

NBER ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Yan Qian

University of North Carolina at Chapel Hill ( email )

Chapel Hill, NC
United States

Andreas Stathopoulos

University of North Carolina (UNC) at Chapel Hill ( email )

102 Ridge Road
Chapel Hill, NC NC 27514
United States

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