Eurobond

A bond issued in a currency other than the currency of the country or market in which it is issued.

Investopedia Says:
Usually, a eurobond is issued by an international syndicate and categorized according to the currency in which it is denominated. A eurodollar bond that is denominated in U.S. dollars and issued in Japan by an Australian company would be an example of a eurobond. The Australian company in this example could issue the eurodollar bond in any country other than the U.S.

Eurobonds are attractive financing tools as they give issuers the flexibility to choose the country in which to offer their bond according to the country's regulatory constraints. They may also denominate their eurobond in their preferred currency. Eurobonds are attractive to investors as they have small par values and high liquidity.

Related Links:
Investing in bonds - What are they, and do they belong in your portfolio? Bond Basics Tutorial
They may not be sexy, but bonds do have a place in every balanced portfolio. Find out why. Advantages Of Bonds
Learn the complex concepts and calculations for trading bonds including bond pricing, yield, term structure of interest rates and duration. Advanced Bond Concepts

Bond denominated in U.S. Dollars or other currencies and sold to investors outside the country whose currency is used. The bonds are usually issued by large underwriting groups composed of banks and issuing houses from many countries. An example of a Eurobond transaction might be a dollar-denominated debenture issued by a Belgian corporation through an underwriting group comprised of the overseas affiliate of a New York investment banking house, a bank in Holland, and a consortium of British merchant banks; a portion of the issue is sold to French investors through Swiss investment accounts. The Eurobond market is an important source of capital for multinational companies and foreign governments, including Third World governments.

A Eurobond is an international bond that is denominated in a currency not native to the country where it is issued. It can be categorised according to the currency in which it is issued. London is one of the centers of the Eurobond market, but Eurobonds may be traded throughout the world - for example in Singapore or Tokyo.

Eurobonds are named after the currency they are denominated in. For example, Euroyen and Eurodollar bonds are denominated in Japanese yen and American dollars respectively. A Eurobond is normally a bearer bond, payable to the bearer. It is also free of withholding tax. The bank will pay the holder of the coupon the interest payment due. Usually, no official records are kept.

The first European Eurobonds were issued in 1963 by Italian motorway network Autostrade.^[1] The $15 million loan was arranged by London bankers S. G. Warburg.^[2]

The majority of Eurobonds are now owned in 'electronic' rather than physical form. The bonds are held and traded within one of the clearing systems (Euroclear and Clearstream being the most common). Coupons are paid electronically via the clearing systems to the holder of the Eurobond (or their nominee account).

References

1. ^ "History of the Autostrade Group". http://www.autostrade.it/en/chi-siamo/storia_index.html?initPos=1. 
2. ^ "$15M. Autostrade Loan, Consortium Headed By Warburgs". The Times. 19 June 1963. 

This economics or finance-related article is a stub. You can help Wikipedia by expanding it. v • d • e

This entry is from Wikipedia, the leading user-contributed encyclopedia. It may not have been reviewed by professional editors (see full disclaimer)