Bonds without Borders: A History of the Eurobond Market

Introduction: Fifty Years of the Eurobond Market

It was Paul who came up with the idea. Instead of singing the usual love song lyric of ‘I love you’, it should be in the third person ‘She loves you’ and other band members would respond with the refrain ‘yeah, yeah, yeah’. A few days after writing the song, The Beatles gathered at Abbey Road Studios, London, on 1 July 1963 to record ‘She Loves You’ for release as a single. Released in the following month it was a gigantic success, becoming the best-selling single of 1963, and remains the best-selling Beatles' single in Britain. It was the breakthrough that led The Beatles to international success.

As that recording session in Studio 2, Abbey Road was getting under way, five miles away in Gresham Street in the City of London a group of senior international bankers and lawyers were signing a subscription agreement for an international bond issue for Autostrade, an Italian road builder. It was the first of a new type of financing targeted at international investors. This new ‘Eurobond’, as it came to be known, represented an historic breakthrough in the international financial markets.

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The Eurobond market, the largest international capital market the world has known, has a confusing name. Eurobond doesn't refer exclusively to bonds issued in Europe or indeed, bonds denominated in the euro currency. (Nor does it refer to the term chosen by the authorities during the current financial crisis to describe a possible European ...