9 - The Eurobond Market

Abstract

This chapter reviews the Eurobond market in terms of the structure of the market, the nature of the instruments, the market players, the issuing process, and the technical aspects such as taxation and swap arrangements. A Eurobond is a debt capital market instrument that is issued in a Eurocurrency through a syndicate of issuing banks and security houses and distributed internationally when issued—that is, sold in more than one country of issue and subsequently traded by market participants in several international financial centers. However, foreign bonds are debt capital market instruments that are issued by foreign borrowers in the domestic bond market of another country. There is a wide range of instruments that are issued in the Eurobond market designed to meet the needs of borrowers and investors. When a company raises a bond issue, its main concerns are the issue and the interest rate of the bond that is to be paid for the funds borrowed. The issue of new Eurobonds and the use of asset swaps in conjunction with issues are a vital part of the market with investment banks keeping a close observation of the asset swap curve to spot any opportunities that may arise to make a new issue of paper more attractive.