An Introduction to Bond Markets, Fourth Edition

Chapter 6

THE EUROBOND MARKET

The Eurobond market is an important source of funds for many banks and corporates, as well as central governments. The Eurobond market has benefited from many of the advances in financial engineering, and has undergone some innovative changes in the debt capital markets. It continues to develop new structures, in response to the varying demands and requirements of specific groups of investors. The range of innovations have customised the market to a certain extent, and often the market is the only opening for certain types of government and corporate finance. Investors also often look to the Eurobond market due to constraints in their domestic market, and Euro securities have been designed to reproduce the features of instruments that certain investors may be prohibited from investing in in their domestic arena. Other instruments are designed for investors in order to provide tax advantages. The traditional image of the Eurobond investor - the so-called ‘Belgian dentist’ - has changed and the investor base is both varied and geographically dispersed worldwide.

 

The key feature of Eurobonds, which are also known as international securities, is the way they are issued, internationally across borders and by an international underwriting syndicate. The method of issuing Eurobonds reflects the cross-border nature of the transaction, and unlike government markets where the auction is the primary issue method, Eurobonds are typically issued under a ‘fixed ...