Carrefour
Carrefour
FIN4812
International Finance
Case Analysis
CARREFOUR S.A
This report is created with a discussion over several important international finance topics for instance, interest-rate parity, currency risk management, regarding description on Carrefour S.A. financing policies as well as hedging strategy. Additionally, we also discussed on which currency Carrefour should issue its 10-year, 750 million euro, annual coupon bond, its foreign currency risk exposure and a possible hedging decision in dealing with any or all of the identified risks.
Summary of the Case Study
This case is related to Carrefour S.A. planning to finance its growth by issuing debt securities and considering borrowing in British sterling in order to take advantages of the opportunity in that currency. Carrefour is a France large retail-stores business starts up in 1963. Carrefour S.A. was Europe’s largest retailer. They have had a expedite growth with many acquisitions by opening their branches throughout Europe like Belgium in 1969 and also Brazil in 1975 and have become the largest retailer in France, Belgium, Greece, and Spain. Moreover, have done mergers with Euromarche and Montlaur in 1991, Promodes in 1999.
They are said to be profitable in many regions they do operations in. The company expected to maintain its expansion strategies on and has started to relaunched its expansion in China, with the opening of store in Chengdu in June.
Carrefour hedged their foreign currency exposure on imported goods through currency-forward contracts. Most of the Carrefour borrowings (debt) are denominated with many currencies accompanying of EUR 13.5 billion. However it has been hedged. As the company is decided to use bonds in this financing deal they need to take into considerations of the country’s current inflation, interest-rate and exchange rate environment. The countries they are taking into accounts are Euro which would be priced at a coupon rate of 514, 538 in
FIN4812
International Finance
Case Analysis
CARREFOUR S.A
This report is created with a discussion over several important international finance topics for instance, interest-rate parity, currency risk management, regarding description on Carrefour S.A. financing policies as well as hedging strategy. Additionally, we also discussed on which currency Carrefour should issue its 10-year, 750 million euro, annual coupon bond, its foreign currency risk exposure and a possible hedging decision in dealing with any or all of the identified risks.
Summary of the Case Study
This case is related to Carrefour S.A. planning to finance its growth by issuing debt securities and considering borrowing in British sterling in order to take advantages of the opportunity in that currency. Carrefour is a France large retail-stores business starts up in 1963. Carrefour S.A. was Europe’s largest retailer. They have had a expedite growth with many acquisitions by opening their branches throughout Europe like Belgium in 1969 and also Brazil in 1975 and have become the largest retailer in France, Belgium, Greece, and Spain. Moreover, have done mergers with Euromarche and Montlaur in 1991, Promodes in 1999.
They are said to be profitable in many regions they do operations in. The company expected to maintain its expansion strategies on and has started to relaunched its expansion in China, with the opening of store in Chengdu in June.
Carrefour hedged their foreign currency exposure on imported goods through currency-forward contracts. Most of the Carrefour borrowings (debt) are denominated with many currencies accompanying of EUR 13.5 billion. However it has been hedged. As the company is decided to use bonds in this financing deal they need to take into considerations of the country’s current inflation, interest-rate and exchange rate environment. The countries they are taking into accounts are Euro which would be priced at a coupon rate of 514, 538 in