Global bond investment is both technical and difficult because of the vast diversity of markets, instruments, and currencies offered. Moreover, instruments vary in these markets from straight bonds and floating-rate notes denominated in various currencies to bonds with numerous and often exotic, option clauses.

Although debt financing has always been international in nature, there is still no unified global bond market. Instead, the global bond market is divided into three broad groups: domestic bonds, foreign bonds, and international bonds.

Domestic bonds are issued locally by a domestic borrower and are usually denominated in the local currency. Foreign bonds are issued on a local market by a foreign borrower and are usually denominated in the local currency. Foreign bond issues and trading are under the supervision of local market authorities. International bonds are underwritten by a multinational syndicate of banks and are placed mainly in countries other than the one in whose currency the bond is denominated. These bonds are not traded on a specific national bond market.

Question:

Why would a non-US firm have strong incentives to issue bonds in New York? Discuss the reasons the firm may have to have such incentives. What are the pros and cons of the alternatives available?