--%>

Foreign bonds and Eurobonds

List some of the differences between the foreign bonds and Eurobonds and also describe why Eurobonds make up lion’s share of the international bond market.

E

Expert

Verified

Two segments of international bond market are:

a) Eurobonds and
b) Foreign bonds.

Foreign bond issues are the one that is provided by the foreign borrower to investors in the national capital market and is denominated in that nation’s currency.  Eurobond issue is one that is denominated in particular currency, however, sold to investors in the national capital markets other than the country that issues denominating currency.

Eurobonds make up over 80 percent of international bond market.  Two important causes for this arise from the fact that U.S. dollar is the currency that is frequently sought in the international bond financing.  Firstly, Eurodollar bonds is brought to the market more rapidly as compared to the Yankee bonds since they are not provided to the U.S. investors and therefore do not have to meet the strict SEC registration requirements.  Secondly, Eurobonds are bearer bonds which give anonymity to the owner and therefore provide the mode for evading the taxes over the interest received.  Due to this, investors are usually willing in order to accept the lower yield on Eurodollar bonds as compared to the registered Yankee bonds of comparable terms, where the ownership is recorded.  For borrowers, lower yield means a lower cost of debt service.

   Related Questions in Financial Accounting

  • Q : Free-riding firms without tradable

    Explain how do firms with no tradable assets get free-ride from the firms whose securities are internationally tradable?

  • Q : Define the term Debtor Define the term

    Define the term Debtor. Is they our client?

  • Q : What is Gresham’s Law What do you mean

    What do you mean by the Gresham’s Law?

  • Q : Case study of gene expression analysis

    The paper by Golub et al. that was the focus of the second part of the BioConductor practical was the first analysis of its kind, demonstrating that gene expression analysis could potentially be used to classify leukaemia sub-types. Since its publication in 1999 there

  • Q : Case study of a hospitals Radiology

    The typical mid-sized hospital trying to keep its head above water in the increasingly tight health care market. It has determined that a critical area for it in today’s market is customer service. Until eight or nine years ago, hospital’s had a reputation

  • Q : Balance per bank What does Balance per

    What does Balance per bank signify?

  • Q : International foreign and domestic trade

    Explain some of the reasons why international foreign trade is difficult and risky from the perspective of exporter than is domestic trade.

  • Q : Creation of North American Trade

    Mr. Ross Perot, former Presidential candidate of the Reform Party, that is the third political party in the United States, had strongly protested in the creation of North American Trade Agreement (NAFTA), however, which was inaugurated in the year 1994, due to fear of

  • Q : What is Corporate Social Responsibility

    Corporate Social Responsibility directly states that every company is responsible towards the society and the environment. So this is a duty of every company to create eco-friendly new products. In the current scenario when the fuel prices are increas

  • Q : Goals of Social Democrats What were the

    What were the goals of Social Democrats? What did Anarchists want?