WHAT IS A EUROBOND? Straight to the Point

In around two minutes you will know what is a Eurobond. You will get both professional definition and easy explanation. No intro, no outro, straight to the point.

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Eurobond is a fixed income security that's denominated in a currency other than the home currency of the country in which it is issued.

A Eurobond is still a bond in its nature. And if you are not sure what a bond is, feel free to watch my previous video.

One of the reasons Eurobonds exist is because they provide incredible flexibility for issuing company.

For example, a German company can issue Eurobonds in US dollars to sell them on Japanese market.

And the reason why US dollar has been used is because this is one of the most common business currencies in the world.

Otherwise, this German company had to issue bonds in Japanese yen, which will be harder to convert later.

One of the most common confusions about Euro bonds is that people think that it’s called Euro because it used on European territory, or because it uses Euro as its main currency.

Both statements are wrong. Once again, a Eurobond is just a bond that is issued in a foreign currency, other than its home country.

But there are risks associated with Eurobonds. And mainly, these are currency conversion risks. Some Eurobonds have 30-year maturity dates and anything can happen with either of currencies during that time which will be unfavorable either for an issuer or for a borrower.

But at least, Eurobonds have no clear regulations and some tax advantages. Since they are technically not registered, there are no records of ownership.

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