Covered Bonds
February 12, 2025
Just like accounts receivable turnover ratio show the financing that the firm is providing to its buyers interest free, the accounts payable turnover ratio show the financing that the firm is able to receive from its vendors and suppliers free of cost. Since there are no interest charges involved and this is purely trade credit, […]
Banking activity is generally considered to be risky. Banks earn money by borrowing money from people and then lending them to other people at a higher rate of interest. However, commercial banking activity is considered to be even riskier. This is generally because of the huge dollar value of the transactions in commercial banking. Hence, […]
The Chinese government has a bad reputation when it comes to finances. Most countries including the developed ones like the United States believe that the Chinese government regularly manipulates and outsmarts them. Now imagine if the strong Chinese government went up against smaller nations like Sri Lanka, Nepal, Pakistan, and Bangladesh! There would be no […]
Predatory Lending, also colloquially known as loan sharking is a bad business model. This business has always been run by anti-social elements and even mafia syndicates right from the age of the Renaissance. The loans were granted without any formal process. The recoveries were done in the dark alleys, and the entire operation was far […]
In the previous article, we have explained the concept of omnichannel retailing. We have also seen how it is different from multichannel retailing and what are some of the benefits of using omnichannel retailing. However, there are many critics who believe that omnichannel retailing is only good in theory. When it comes to real life, […]
The Eurobond market is one of the largest debt markets in the world. It comprises a large portion of the debt which is issued by multinational companies as well as governments. It is therefore important for any student of fixed income securities to be aware of what Eurobonds are.
The fact that these bonds are called “Euro bonds” can be quite confusing to many investors. This is because a lot of these bonds are not necessarily originate in Europe, by European countries. Most of these bonds are not even denominated in the currency Euro. However, for many years, these bonds have been called Eurobonds. As a result, they are now referred to by that name even though governments of the European Union are planning to change that in the near future.
In this article, we will have a closer look at what the Eurobond market is and how it works.
In order to understand the Eurobond market, we first need to understand what a domestic bond issue, as well as a foreign bond issue, is.
When the issuer taps such funds, they are said to be dealing in the Euromarkets. Hence, Eurobonds are issued by a foreign company, in a different country and are denominated in a third currency! An example would be a British company borrowing United States dollars in the Amsterdam markets. Notice that the issuer, the investor, and the country are all different.
Now that we are aware of what Eurobonds are, the next question is about why do such bonds exist? Some of the benefits of issuing these bonds have been explained below:
The fact of the matter is that Eurobonds are an extremely large and liquid type of debt market. Almost every major country, as well as corporation around the world, has some exposure to the Eurobond market.
Your email address will not be published. Required fields are marked *