Series 82: Eurobonds

Eurobonds

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 it is issued (sold) or where the company is headquartered.

Typically issued by multinational corporations and national governments, Eurobonds are underwritten by an international syndicate and sold to a market dominated by institutional investors. The bonds may be issued and sold in Britain by a Kuwaiti company, for example, and denominated in yen. Whatever currency the Eurobond is denominated in will be the currency the principal and interest are paid in. Eurobonds may be denominated in any international currency.

Issuers of Eurobonds can choose to issue the bond in a country with the fewest regulatory constraints and in a currency most acceptable to the international market. Eurobonds are bearer bonds and thus provide anonymity to the owners and allow them to avoid paying taxes on the interest they receive. Issuers can therefore offer these bearer bonds at an even lower yield. Eurodollar bonds are Eurobonds denominated in U.S. dollars, meaning that the interest and principal will be paid in U.S. dollars, but the bonds will be sold outside the U.S. Since Eurodollar bonds are not offered to U.S. investors or issued on its shores, they do not have to meet SEC registration requirements, and the bondholders are not subject to U.S. taxes.

Since you're reading about Series 82: Eurobonds, you might also be interested in: