Equity versus debt financing of a foreign subsidiary?

Both alternatives depend on the foreign country that is the subsidiary's market.
If u choose borrowing, the interest rate prevailing there would be very critical (as measured against the-higher-the-better inflation rate); so would be the exchange rate and alot of other country risk measures. u must not borrow in excess of the borrowing capacity of your subsidiary. The last thing u want is excessively high interest burden especially if too much cyclicallity is inherent in this foreign country or the industry your subsidiary pursues
The equity alternative can be less appealing because of the typically higher required return but still higher equity serves as a buffer against losses and conveys less interest burden
all in all u need to analyze both your subsidiary's business and market very carefully to assess the tradeoff

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