--%>

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 : Explain Return on Equity or ROE Return

    Return on Equity (ROE): The amount of net income returned as a percentage of share-holders equity. The return on equity measures a corporation's profitability by revealing how greatly profit a company produces with the money share-holders encompass in

  • Q : What is Bankers acceptance What is

    What is Bankers acceptance and what is its role?

  • Q : Sharpe performance measure concept

    Explain the Sharpe performance measure concept.

  • Q : Cash flows in APV model State the

    State the intuition of discounting several cash flows in APV model at particular discount rates?

  • Q : Definition of Ledger What is the

    What is the Definition of Ledger in terms of Accountancy?

  • Q : Prepare the journal entry to record the

    The Webster Company uses the aging method to estimate the allowance for doubtful accounts. The following schedule of accounts receivable was prepared as at December 31, 20x6: Age Balance % uncollectible 0-30 days $674,000 0.5% 31-60 days 186,000 1.2% <

  • Q : Abnormal profits Atypically large

      Atypically large proceeds made by an individual or company from commercial activity. An abnormal profit exceeds the normal chance for profit derived from labor costs and capital and considered normal profit. Abnormal profit in a business resides of monopoly and consortium profits.

  • Q : REDUMPTION OF DEBENTURS WHAT IS

    WHAT IS REDUMPTION? AND WHAT ARE THE CONDITIONS?

  • Q : Special drawing rights Discuss how the

    Discuss how the special drawing rights (SDR) are formed. And also, explain the circumstances due to which SDR was created.

  • Q : Account A structure for showing the

    A structure for showing the effect of market events on a particular asset, liability, equity, earnings, or expense. The effects are measured in terms of dollars. The account looks like as a collection point in the meanwhile the processing of all the transactions involving the balance sheet or inc