Eurobonds are very common in the currency trading market. The definition of a Eurobond is bond that is sold outside of the country in which the currency is denominated. So if a bond is issued in America but is denominated in another currency other than the dollar, for example the euro, it is considered a Eurobond. Eurobonds can be traded throughout the world in different Euromarkets. The most popular one is that of Tokyo.

Eurobonds are used in many cases of despair when a company starts to get into some financial trouble with its assets. Bonds are usually not liquid but hold a lot of value to a company’s worth. According to the very popular newspaper, The Financial Times, Eurobonds were sold to a foreign company from the well-known shipping company Maersk. During a business transaction, the company ordered too many ships and was unable to produce the cash to pay for these ships. Maersk is a very large company with sub companies all over Europe, Germany included. Germany’s company was unable to produce the cash but because Maersk has Eurobonds in the form of other currencies, they were able to sell and issue out almost $750 million worth of Eurobonds in order to save their company form a crisis. This could ultimately bring the company’s revenues down for the quarter, but it will help them in the long run figure out how not to make a huge mistake when ordering. Companies must be aware of budget when ordering. They must also preserve their bongs and not be forced to issue them when needed.

Another important aspect to note about Eurobonds is the rate at which they are sold. They can carry fixed rates or floating rates. A fixed rate on a Eurobond have a fixed coupon value whereas a floating rate have different coupons and are usually reset every 3 to 6 months.

Sources:

http://www.ft.com/cms/s/0/1987f334-cff5-11de-a36d-00144feabdc0.html?nclick_check=1 (Financial Times)