Definition
The term huaso bond refers to an indenture issued in Chile, in Chilean peso, by a foreign bank or corporation. Huaso bonds are issued when a corporation wishes to raise capital from investors located in Chile.
Explanation
Foreign corporations that wish to raise funds in Chile have the option of issuing what are known as huaso bonds. These bonds are sold by non-domestic entities, including corporations, financial institutions and governments, and are issued in the Chilean peso. This is typically done when the interest rates in Chile are low relative to the foreign corporation's domestic rates, which lowers their interest expense.
Since the bond is issued in Chile's domestic currency, investors located in Chile are also insulated from currency exchange rate risk. Foreign companies will usually issue these securities if they have plans to establish operations in Chile. These bonds are also attractive to investors wishing to geographically diversify their portfolios.
A huaso is a skilled horseman in Chile, similar to the American cowboy and gaucho of Argentina. They are a significant part of the country's culture, and oftentimes play an important role in parades and other festive events.
Related Terms
The term investment-grade bond refers to a security deemed to be of high quality by a credit rating agency. Since the risk of default is lower with investment-grade bonds, these securities will pay a relatively low rate of interest.
Moneyzine EditorNovember 6th, 2024
The term dim sum bond refers to an indenture issued in Hong Kong, in Chinese yuan, by a bank or corporation located in China or Hong Kong. Dim sum bonds are issued when a corporation wishes to raise capital from investors interested in holding yuan denominated assets.Moneyzine EditorNovember 6th, 2024
The term baklava bond refers to an indenture issued in Turkey, in Turkish Lira, by a foreign bank or corporation. Baklava bonds are issued when a corporation wishes to raise capital from investors located in Turkey.Moneyzine EditorNovember 6th, 2024
The term Arirang bond refers to an indenture issued in South Korea, in Korean won, by a foreign bank or corporation. Arirang bonds are issued when a corporation wishes to raise capital from investors located in South Korea.Moneyzine EditorNovember 6th, 2024- The term panda bond refers to an indenture issued in China, in Chinese renminbi, by a foreign bank or corporation. Panda bonds are issued when a corporation wishes to raise capital from investors located in China.Moneyzine EditorNovember 6th, 2024
