• Eurobond market
– Underwritten by a multinational syndicate of banks and are placed
mainly in countries other than the one in whose currency the bond
– Also known as an “international bond”.
– Eurobonds are not traded on a specific national market.
• Eurobonds are debt agreements that are
denominated in a currency other than that of the
country in which they are held
– E.g., a bond denominated in yen sold in the United
• About 75% of eurobonds are denominated in
• Firms issuing dollar-denominated Eurobonds
pay a slightly lower interest rate than they
would pay in the U.S.
The main advantages of Eurobonds
• increased liquidity of European bond markets
• protection from large market shocks and
erratic market discipline
• guaranteed funding for all EMU countries
• an improvement in the international position
of the euro.
The main disadvantages are…
• possible free-riding problems
• tensions with the no-bailout clause
• credibility and political viability
• The euro bond market developed quite well since 2001. The growing
• the euro as an international investment currency has made the
market for eurodenominated
• issues more attractive for both investors and issuers. A key element
• behind these developments of the European bond market in this
period was the
• impetus for a better integrated and more liquid market and the
• of innovative products, such as index-linked bonds, real-time bond
• income exchange traded funds, credit derivatives and structured