Italy needs to finance its debt and will issue €100.55M of bonds with a coupon rate of 7.5% (interest paid semi-annually), maturing in 20 years. The market rate for these bonds is 4.5%. Please answer the following:
a) What type of bonds are these for non Euro zone countries?
b) What type of risk would such bonds carry for US investors?
c) What impact do ratings agencies have on the bond market?
d) Why do countries issue bonds?
e) Will the bonds be issued at a discount or a premium?
f) How much cash will Greece receive for the issuance, assuming semi-annual interest payments?