Abstract:
This paper first examines the firm-level determinants and financial influence of raising foreign currency denominated debt for china by taking advantage of the currency structure of financial liabilities in 2013-2015 annual reports of CSI 800 Index companies. The results suggest that foreign exchange riskhedging and internationalization are the main determinants of foreign currency denominated debt. In addition, this paper first examines the relationship between foreign currency denominated debt and foreign exchange derivatives of Chinese listed companies, and confirms the complementary relationship. Further more, foreign currency denominated debt has lower interest rate, which may be offset by exchange loss with RMB depreciation. These findingshave some implicationson capital structure especially in the aspect of currency structurefor corporate financing and policy making under the background of deleverage.
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