Eurobonds are debt contracts which record the borrower’s obligation to pay interest at a given rate and the principal amount of the bond on specified dates. The issue has a specific structure and is defined in the EU Prospectus Directive as transferable securities. Eurobonds are tradable instruments. They are intended to be bought and sold during the period up to their maturities. They are usually launched through public offerings and are listed on stock exchanges. The London and Luxemburg stock exchanges are most frequently used.

Although Eurobonds are frequently sold in Europe, they are not necessarily denominated in Euros nor issued in a European country. It could be yen, Swiss francs, or Australian dollars. Eurobonds are bonds denominated in various currencies, including U.S. dollars and are intended for sale outside the country of origin. The Eurobond is issued overseas and regulated under an agency of the issuing country. In addition to domestic and international banks and corporations, Eurobonds are issued by World Bank and the Inter-American Development Bank, and by sovereigns, such as France, the United Kingdom, Mexico, Sweden, and Argentina. Not like domestic corporate bond pays its coupon interest in two semi-annual pieces, the Eurobond usually pays annually, except in the case of emerging market bonds which primarily pay semi-annually. Eurobonds tend to have shorter maturities than comparable domestic U.S. bonds and offer a greater degree of call protection. While U.S. bonds can be called anytime after a day known as the call protection date, Eurobonds can be called only on specific dates. Because there is no central register where holders of the issue are named, the Eurobond is in sense a bearer instruments, the interests are paid upon presentation of detachable coupons while the principal amount is repaired on presentation of Eurobond itself. In most cases, Eurobonds have no foreign with holing tax on wither coupon or redemption payments.

Citation:

Anonymous. Euromoney. London: Jan 1996. p. 40 (2 pages)

Journal of Pacific History Dec2004, Vol. 39 Issue 3, p325-341