18 - The Eurobond market I

Abstract

This chapter reviews the Eurobond market in terms of the structure of the market, the nature of the instruments themselves, the market players, the issuing process, and technical aspects such as taxation and swap arrangements. A Eurobond is a debt capital market instrument issued in a “Eurocurrency” through a syndicate of issuing banks and securities houses that is sold in more than one country of issue and subsequently traded by market participants in several international financial centers. The Euro-deposit now refers to any deposit of a currency outside the country of issue of that currency and is not limited to Europe. For historical reasons and due to the importance of the US economy and investor base, the major currency in which Eurobonds are denominated has always been US dollars. Foreign bonds are debt capital market instruments that are issued by foreign borrowers in the domestic bond market of another country. As such, they trade in a similar fashion to the bond instruments of the domestic market in which they are issued.