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terms were most favorable. In 1977, City had notes payable of
more than $70 million to U.S. banks pursuant to a revolving
credit agreement dated April 1, 1975. The notes bore interest at
a floating rate of one-half percentage point above the prime
rate, and the notes had maturities of 3 to 7 years. In order to
obtain long-term financing at a fixed rate and to reduce the
amount of indebtedness owed to the U.S. banks under the revolving
credit agreement, City sought access to the Eurobond market.
Eurobond Market/Use of Netherlands Antilles Finance Subsidiaries3
During the years at issue, a major capital market outside
the United States was the Eurobond market. The Eurobond market
was not an organized exchange but rather a network of
underwriters and financial institutions that marketed bonds
issued by private corporations (including, but not limited to,
finance subsidiaries of U.S. companies), foreign governments and
their agencies, and other borrowers. In addition to individuals,
purchasers of the bonds included institutions such as banks
(frequently purchasing on behalf of investors with custodial
accounts managed by the banks), investment companies, insurance
companies, and pension funds. There was a liquid and well-
capitalized secondary market for the bonds with rules of fair
practice enforced by the Association of International Bond
3 The description which follows is based upon the parties’
stipulations.
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