Eurobond

Eurobond is a type of bond that is issued in a currency different from the currency of the country where it is sold. It is a debt instrument that allows governments, corporations, and other entities to raise funds from international investors.

Here are some key features of Eurobonds:

1. Currency: Eurobonds are typically denominated in a currency other than the domestic currency of the issuer. Common currencies used for Eurobond issuances include the US dollar, euro, Japanese yen, and British pound.

2. Issuers: Eurobonds can be issued by governments, multinational corporations, financial institutions, and supranational organizations like the World Bank or the European Investment Bank.

3. International Market: Eurobonds are sold to international investors in various countries, making them a global investment instrument. They are typically listed on international exchanges and can be traded by investors worldwide.

4. Interest Rates: Eurobond issuers pay interest to bondholders at a predetermined rate, typically fixed or floating. The interest payments are usually made semi-annually or annually.

5. Maturities: Eurobonds can have different maturity dates, ranging from a few years to several decades. The maturity period is specified at the time of issuance and represents the duration until the bond’s principal amount is repaid.

6. Yield: The yield on Eurobonds is influenced by various factors such as the creditworthiness of the issuer, prevailing interest rates, and market demand. Higher-yielding Eurobonds generally offer higher returns but may carry higher risks.

7. Credit Rating: The creditworthiness of the issuer is an important consideration for investors. Credit rating agencies assess the financial strength and ability of the issuer to meet its debt obligations. Higher-rated issuers generally offer lower yields due to their lower default risk.

8. Uses: Eurobonds are used by issuers to finance various purposes such as infrastructure projects, corporate expansions, government budget deficits, or refinancing existing debt.

It’s important to note that Eurobonds are distinct from bonds issued within the Eurozone. The term “Eurobond” refers to the international nature of the bond issuance rather than the currency used.

In summary, Eurobonds are debt instruments issued in a currency different from the domestic currency of the issuer. They provide a means for governments, corporations, and other entities to raise funds from international investors. Eurobonds offer flexibility in terms of currency choice, maturities, and interest rates, making them an important tool in global capital markets.