International Finance: BHP Billiton, Bruin Aircraft, Beacon Lighting, UniSuper

BUS 330 INTERNATIONAL FINANCE

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Table of Contents
Introduction......................................................................................................................................3
Chapter 3: BHP Billiton.................................................................................................................3
A. Flow of BHP’s fund................................................................................................................3
B. Medium-Term Loans of Citigroup..........................................................................................3
Chapter 5: Bruin Aircraft Pty Ltd....................................................................................................5
Chapter 6: Beacon Lighting.............................................................................................................7
A. Scenario description regarding high production cost..............................................................7
B. Incurring high production cost................................................................................................7
C. Stability of Australian dollar outflow......................................................................................7
D. Relationship with Alibaba.......................................................................................................8
Chapter 7: UniSuper........................................................................................................................9
A. Investing in Poland..................................................................................................................9
B. Covering arbitrage of interest..................................................................................................9
C. Risk in covering arbitrage.....................................................................................................10
D. Choosing between Australian treasury bills and covered interest arbitrage.........................10
Conclusion.....................................................................................................................................10
Reference List:...............................................................................................................................11

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Introduction
Exchange rates freely float that corresponds to frequent fluctuations and this depends on various
factors, which will be detailed in this current assignment. This task is based on the international
financial market. BHP Billiton is a multinational company of Australia that has eight subsidiary
companies. Detail several factors impact exchange rates along with scenario for increasing
production rate would also in this current section.
Chapter 3: BHP Billiton
A. Flow of BHP’s fund
Flow of fund of a company depends on the fiscal policy applied in the specific economy of that
country. Funds can flow depending on the nature of the fiscal policy that is the total amount of
interest that can be paid to make the cash flow from one company to another1. In this case BHP
Billiton has different subsidiaries companies in eight countries and Citigroup has branches in
many countries can collaborate to maintain a n increase flow of cash in the market. As Citigroup
has many branches in different countries, Billiton can use their branches to maintain the cash
flow by investing through Citigroup in their subsidiaries that is present in eight different
countries. Sometimes Citigroup could serve to Billiton as Creditors in case of investing in
economically backward countries and it can help in flowing of cash in the markets of small
economy by large stock investments.
B. Medium-Term Loans of Citigroup
Loan Denominated Annualised rate
British pounds 13%
Australian dollars 11%
1 Ahmed, Shaghil, Brahima Coulibaly, and Andrei Zlate. "International financial spillovers to emerging market
economies: How important are economic fundamentals?." Journal of International Money and Finance 76 (2017):
133-152.

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Canadian dollars 10%
Japanese yen 8%
Table 1: Medium-term loan interest percentage
(Source: Given by the researcher)
British subsidiaries could use Japanese yen as the interest rate is less compared to remaining
currencies that are British Pounds, Australian Dollars and Canadian Dollars. Medium term loan
refers to the loan given by main companies to their subsidiary branches. In this case, Citigroup is
the medium of passing the loan from Billiton to their subsidiary companies. Japanese yen is
giving only 8% interest on the loan, which means there will be more chances of investment in
those countries where the subsidiaries will give increase returns to the loan.