Indian Company Costs Calculation of Foreign Currency Loan - Accounting Assignment Help

Assignment Task:

Below mentioned topics need to be covered in the report (whatever applicable as per the case of )

• Globalization of Finance
• Perspectives on Global Financial Management
• Financial Crisis, Currency Crisis
• Balance of Payments, Exchange Rates
• Spots & forwards Currency Markets
• Currency Trading and Arbitrage
• Global Exchange Rate Regimes
• Indian currency markets & Exchange Rate Trends
• Money and Currency markets & Monetary Policy
• Parity Conditions in International Finance
• Corporate strategies under parity imperfections
• Currency forecasting, fundamental and technical analysis
• Interest rates, short and long term rates
• Bond yields, Yield curve, and Term Structure
• Interest rate Forwards and Futures 
• Risk Management using derivatives 
• Currency Forwards, Futures, Swaps &  Options
• Globalization of banking and finance
• Eurobonds, Euro loans, ADRs, GDRs, IDRs
• Country Risk Analysis & Implications
• Cost calculations in International Loans
• International Cost of Capital & Capital Budgeting
• International Investments, FII investment flows in India
• Country Risk, Event Risk, Geopolitical Risk
• Corporate Risk Management under Globalization
• Transaction, Translation & Economic Exposure
• Risk measurement, Control and Reporting

Options:
   
Commercial Loan
Eurobond (7 years)
Eurobond (10 years)
ECA- USA Fixed
ECA- USA Floating
ECA- Japan
ECA- Germany

Sample Case report – current situation, analysis & future outcome

CHASE SYNDICATED COMMERCIAL LOAN PROPOSAL(1996)
 
Chase Manhattan Asia Limited submits an indicative proposal to TISCO for a seven-year FX Term Loan Facility. Provided below is a summary of terms and conditions for consideration: 

Borrower: The Tata Iron & Steel Co. Ltd. 
Facility Type: Commercial Loan Facility 
Purpose: To finance the commercial portion of the financing for the importation of plant and equipment. 
Facility Amount : US$100,000,000. 
Tenor: 7 years 
Repayment: Bullet 
Interest Margin : LIBOR + 100bps (6 Monthly Payments) 
Arrangement Fee: 100bps flat on the Facility Amount (US$ 100 Mn) 
Security: First priority charge over assets purchased by the proceeds of the Facility. 
Financial Covenants: As applicable 
Documentation: Standard provisions for such type of facility including but not limited to negative pledge, Paribas, cross-default, representations and warranties, material adverse change, events of default and etc. 
Arranger: Chase Manhattan Asia Ltd. 
Participating Banks: Member banks of the Syndicate

IRR-valuation & Sensitivity Analysis

• Set the net dollar proceeds from the loan 
• Set the expected LIBOR from the term structure 
• Annualize all other fees and spread 
• Set the expected depreciation of the home currency vis-à-vis USD 
• Use forward rates, if available, to compute home currency cash flows 
• Compute IRR of the cash flows under each LIBOR & USD-INR Scenario 
• Determine the most appropriate LIBOR-USD-INR Combination rate over the time horizon 
• Select the loan if the resultant IRR meets the company’s financing criteria 
• Compare with home currency loan rate for the period 

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