The Genesis of the Roll-over Credit

An examination of the data on issues volumes for the eurobond and eurocurrency markets reveals an extremely rapid growth of the latter particularly at the time the former was declining (see table 1). The sector of the eurocurrency market that has shown most growth in the last few years has been medium-term lending, i.e. lending at up to say twelve years. Such loans are competitive with bond issues and over the last few years have been attractive for many borrowers who traditionally would have required bond finance. Most studies of the eurocurrency market have considered it only as a short-term market and have focused attention on interbank aspects rather than on the final loan to a non-bank borrower. From the point of view of this study however interest in the market centres mainly round its role as a source of medium-term funds and its interrelationship with the eurobond and foreign bond markets.