Resumen

Resulting from the increasing globalization of markets, interest rate and foreign exchange rate management have gained significance for non-financial corporations, especially those with operations in foreign countries. Proper risk administration should first identify the sources of risk, quantify the risk and then, considering the corporation?s objectives and requirements, select and implement an appropriate strategy.

This paper illustrates the effects of changing interest rates and foreign exchange rates on a corporation?s cash flows and cost of debt. The approach to the problem is an indepth case study using scenario analyses in comparison to actual economic developments.The basic conclusion is the corporation?s possibility of synthetically borrowing funds through the use of swaps at more convenient conditions than can be achieved by direct borrowing; and minimizing risks and costs at the same time. A further conclusion is the cost advantage of floating rate debt as well as inflation-indexed debt in comparison with the less developed fixed rate market in Mexico.

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Hogl, S. C. 2010. Risk Management of International Bonds regarding Interest Rates and Foreign Exchange Rates: Case of the Bond Emission Program of a German Subsidiary in Mexico. Tesis Licenciatura. International Business Administration. Departamento de Administración de Negocios Internacionales, Escuela de Negocios y Economía, Universidad de las Américas Puebla. Mayo. Derechos Reservados © 2010.