SIE: Eurobonds And Eurodollar Bonds

Taken from our SIE Online Guide

Eurobonds and Eurodollar Bonds

Eurobonds are a type of international bond and are unique primarily in the way they are issued. A Eurobond is denominated in a currency other than that of the country where the company is headquartered.

Typically issued by multinational corporations and national governments, Eurobonds are underwritten by foreign banks or broker-dealers and typically sold to the market the bond is denominated in (but this is not a requirement). For instance, bonds may be issued and sold in Britain by a Kuwaiti company and denominated in the pound. Whatever currency the Eurobond is denominated in will be the currency the principal and interest are paid in.

Issuers often choose Eurobonds because they can pay better interest rates in the chosen denomination. Moreover, an issuer may choose to issue the bond in a country with the fewest regulatory constraints and in a currency most acceptable to the international market. Eurobonds were originally issued as bearer bonds and thus provide anonymity to the owners, allowing them to avoid paying taxes on the interest they receive. Most Eurobonds are now owned in electronic, rather than certificate, form and they are held within an international clearing system.

Eurodollar bonds are Eurobonds denominated in U.S. dollars, meaning that the interest and principal will

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