Eurobonds are interest-bearing securities issued in the Eurobond market. The Eurobond market constitutes with the foreign bond market the international bond market. The basic feature of Eurobonds is that they are generally issued in a currency (commonly the U.S. dollar or Yen) other than that of the issuer's home country (i.e. bonds issued and/or traded in the UK denominated in euros). Eurobonds are underwritten by an international syndicate and issued simultaneously to investors outside the national jurisdiction. The syndicate companies and their investor clients are considered the primary market for Eurobonds, whereas, in the secondary market, Eurobonds are traded over-the-counter. In general, a firm may raise funds in the Eurobond market by exploiting opportunities that are not available in the domestic market. They are typically unsecured and interest rate payments are free of any withholding taxes. Eurobonds are issued by several entities. These include nonfinancial corporations, multinational companies, international agencies and governments (sovereign governments, provinces, municipalities, cities...), supranational entities (such as the Word Bank or the European Investment Bank). There are many types of Eurobonds with different specific features. Indeed, there are Eurobonds characterized by annual coupon payments and there are also zero-coupon bonds, deferred-coupon bonds and step-up issues. A large part of the Eurobond market is made of bonds with attached warrants of different kinds like equity warrants, debt warrants or currency warrants. They can also include floating rate structures that carry a variable interest rate often based on the London Interbank Offered Rate (LIBOR), the bid on LIBOR (LIBID) or the arithmetic average of the two. Collared Eurobonds own a minimum (floor) and a maximum (cap) coupon rate.

Fabozzi F., Modigliani F., Jones F. (2010), Foundation of Financial Markets and Institutions, Pearson International Edition.
Editor: Bianca GIANNINI

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