Advantage of EurobondsĪn advantage of Eurobonds is that they are easy to sell, relatively low risk, and a fairly safe investment alternative (as they are usually underwritten by financial institutions – for example, investment banks). Most Eurobonds are issued either in US dollars or the Japanese yen. A large pool of investors might prefer to purchase dollar-denominated Eurobonds, due to relatively favorable dollar interest rates, compared to other currencies. Eurobonds are generally issued by companies or governments that require secure long-term funds.Įurobonds denominated in dollars (known as Eurodollars) are the largest component of the Eurobond market. Issuers also tend to look at the market depth and the economic cycle, when considering which country to issue Eurobonds in. Issuers of Eurobonds tend to prefer issuing such bonds in stable markets (such as the US), where the regulatory landscape is in accord with their needs. They seek to borrow money at the cheapest rate to finance their global operations. Large companies (multinational companies and supranational organizations) and countries prefer international capital markets and tend to issue Eurobonds denominated in the currency (for example, the US dollar) that offers the most attractive interest rate at a given time. The issuer of the same can choose between a significant range of maturities usually 3, 5, 7, and 10 years – although some Eurobonds have maturities ranging from 15 to 30 years. These bonds have medium to long-term maturities. Such bonds can be issued with fixed or floating interest rates. They can also be issued through an international syndicate (for example, a US company’s Eurobond can be underwritten by a British syndicate and float the issue in London).Įurobonds account for approximately 30% of the global bond market. Such bonds are issued outside the home country of the issuer and are sold to investors in various countries or markets simultaneously (i.e. For example, bonds issued in Yen in the UK are outside the jurisdiction of the Japanese authoritiesĮurobonds are mostly traded on the London Stock Exchange (LSE), though they can be traded on various other exchanges too.
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