Eurobond

Eurobonds are international bonds denominated in a currency different from the country where they’re issued. Despite the name, they’re not limited to Europe or euros. For example, a Japanese company issuing dollar-denominated bonds in London creates Eurodollar bonds. A U.S. company issuing euro-denominated bonds anywhere outside the eurozone creates Euroeurobonds. The $6 trillion Eurobond market provides flexible funding for multinational corporations and governments. Key features include bearer form (anonymous ownership), annual coupon payments (versus semi-annual for domestic U.S. bonds), and exemption from withholding taxes. Eurobonds are typically issued through international syndicates and listed on exchanges like Luxembourg or London but trade over-the-counter. They’re governed by market practice rather than national regulations, providing issuance flexibility. Major currencies include dollars (65%), euros (25%), and sterling (5%). Benefits include access to international investors, currency diversification, and potentially lower costs. The market developed in the 1960s to avoid U.S. regulations and taxes.