Deutsche Bank AG - Historische Gesellschaft der Deutschen Bank e.V.

International bond markets:
the vear of bonds with warrants
lssuing activity on the international bond market
increased steeply in the year under review; issues by
Japanese debtors of equity-linked dollar bonds with
warrants attached developed particularly dynami-
cally. Attractive terms and conditions for swaps,
climbing share prices in Japan, and companies'
equity capital requirements all played a role here. The
market Segment of fixed-income dollar bonds im-
proved mainly because U.S. interest rates went down
during the long phase in which the dollar was firm.
The reverse was true of issuing activity in other im-
portant currencies, especially the D-Mark, where in-
terest rates climbed and the currency was weak at
Fewer syndicated euroloans
bearer bonds. On the other hand, there was consider-
ably less public-sector borrowing on the bond rnar-
ket.
After the abolition of withholding tax was an-
nounced, both domestic and foreign investors re-
turned to the German bond market. This develop-
ment was encouraged by the diminishing interest
rate disadvantage of German DM bonds, which also
prompted hopes of a D-Mark revaluation. None-
theless, domestic investors continued to buy large
amounts of foreign currency bonds. The willingness
of domestic institutions to invest on the German
bond market was relatively modest owing to grow-
ing demand for credit and expected write-down re-
quirements.
New business in medium and long-term interna-
tional syndicated loansdeclined sharply in 1989, after ~ ~ ~ ~ ~ ~ ~ ~ ~ m
- two years of robust expansion. The main cause was m ~ nquoaed~m~a~
quoted ampsniss
Manbrr of new ltsbngs
falling demand for international financings of companymergers
and acquisitions, an area in which borrowers
in the U.S.A. and the U.K. increasingly turned to
domestic markets. In international lending business
there was greater diversification of margins in line
with risks. New loans to developing cauntries continued
to decline, whilst loan commitments to East European
states increased slightly.
German bond market:
withholding tax abolished
Following the abolition on July 1,1989 of withhold-
ing tax- introduced at the beginning of 1989 - issuing
and investment activity on the domestic bond market
rose strongly, Banks again began to issue more
P-'