Why eurobonds are so popular across the world
One of the most popular types of global bond issues are what are termed as ‘eurobonds’. A eurobond is a bond that is denominated in a currency, or a basket of currencies, other than the currency of the country in which it is being issued.
The nationality of the issuer is not a factor in such cases. For instance, consider US dollar-denominated bonds being issued in South Korea. These would be categorised as eurobonds, irrespective of whether they are issued by an American corporation like Ford or a Korean company like Hyundai. This is because the bonds are denominated in dollars whereas the local currency in Korea is the Won.
Another category of global bonds is what is termed as foreign bond’. A foreign bond is denominated in the currency of the country in which it is being issued, but is sold by a foreign entity. For instance, if IBM were to issue bonds denominated in Korean Won in South Korea, it would be classified as a foreign bond.
A bond that is issued by Hyundai in Won in the Korean market, obviously, belongs to neither of these two categories and would be classified as a ‘domestic bond’. Thus, we have three
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