PLEASE ANSWER THE FOLLOWING QUESTION AFTER READING THE PARAGRAPH: . How do subsidiaries finance their operations through Overseas debt Markets?

Raising Money in Overseas Debt Markets

Multinational firms can issue bonds in overseas markets as well as in their home countries. Looking again at our example market, China, which now has an active bond market. Before April 2008, Chinese state-owned enterprises were about the only ones issuing corporate debt in China because corporate bonds were so costly and time-consuming to issue there. Corporate bonds had to be listed on the stock exchange and approved by exchange regulators, making the process subject to political whims. State-owned enterprises raised money in the bond market to finance big infrastructure projects, and the bonds had state guarantees. In 2008, new rules simplified the issuing process, and the Chinese government began letting foreign companies issue yuan-denominated bonds through Hong Kong in 2010. The attraction of the Chinese bond market is that bond markets are a relatively easy and cost-effective way to get money.

McDonalds was the first foreign company to issue yuan-denominated bonds, selling 200 million yuan (or $29 million) of 3 percent notes. As Donald Straszheim, senior managing director and head of China research at the International Strategy & Investment Group observed, There are hundreds of global companies wanting to do more business in China, and they will want to be involved in the countrys evolving credit market.

According to McDonalds spokesperson Lisa Howard, issuing bonds in China gives us access to new funding to support growth in China. We are very confident in the Chinese market and have a strong plan to grow our business in China. Despite facing a widespread food contamination scare in China in 2014, McDonald's long-term outlook remains bullish in its global markets.