Definition
The term Eurobond refers to an international indenture issued in a non-domestic currency. Eurobonds allow issuers to raise funds, while selecting the country to offer their bond based on that country's regulatory environment.
Explanation
Also known simply as an external bond, a Eurobond is any internationally issued bond that carries a non-domestic denomination. For example, a Eurodollar bond refers to a dollar denominated indenture issued outside of the United States. In the same way, the Euroyen refers to a yen denominated indenture issued outside of Japan. Other examples include the Eurosterling, EuroAustralian dollar, EuroFrench franc, and the Eurodeutsche mark.
There are four types of Eurodebt, including "straight" debt, convertibles, currency option, and floating rate notes. Nearly all Eurobonds are offered as fixed rate securities.
Eurobonds provide issuers with the option to select the country that will offer their bonds based on the regulations specific to that country, which will provide the issuer with an advantage relative to their domestic regulations.
Related Terms
The term Formosa bond refers to an indenture issued in Taiwan, in a non-New Taiwan dollar denomination, by a foreign bank or corporation. Formosa bonds are one of several ways for multinational companies operating in Taiwan to raise capital.
Moneyzine EditorJanuary 18th, 2024- The term Uridashi bond refers to an indenture issued outside of Japan, in a non-yen denomination, and sold to Japanese investors. Uridashi bonds are issued when there is a significant yield differential between the foreign and local currency.Moneyzine EditorSeptember 21st, 2023
- The term shogun bond refers to an indenture issued in Japan, in a non-yen denomination, by a foreign bank or corporation. Shogun bonds are one of several ways for multinational companies operating in Japan to raise capital.Moneyzine EditorSeptember 21st, 2023
- The term shibosai bond refers to an indenture privately placed in Japan, in Japanese yen, by a foreign bank or corporation. Shibosai bonds are issued when a corporation wishes to raise capital from private investors located in Japan.Moneyzine EditorSeptember 21st, 2023
