Question

Provide brief and concise answers to the following questions. a. Why might U.S. borrowers be able to obtain funds more cheaply in the Eurodollar loan/bond market versus the U.S. loan/bond market?

Answer 1

Answer:-

U.S. borrowers be able to obtain funds more cheaply in the Eurodollar loan/bond market versus the U.S. loan/bond market because the of lower interest rates. There are lot of companies in US that reveal that they save around  25 to 100 basis points when they borrow from Euro bond market which makes a huge difference when they borrow loans in million dollars.

There are companies in US which have very good credit ratings which help hem to get loans that are cheaper than usual compared to other firms. The high credit rating of the country and ease of doing business and capitalism also helps the US companies to secure loans with lower interest rates in Eurodollar loans than US loans. The stable currency and highly liquid markets also contribute to the easy access of Eurodollar loans/bonds. This helps in quicker transactions in US relative to other countries.