Eurobond

A  is a bond issued in a currency other than the currency of the country or market in which it is issued. For example, a Japanese company might issue a bond in U.S. dollars in the United Kingdom bond market. Eurobonds are issued primarily by supranational organizations and corporations. Eurobonds are bearer bonds, thus are not registered. The holder or bearer of the bond is considered the owner. The first listing of a Eurobond, the Autostrade issue for the Italian motorway network, took place on July 17, 1963 on the Luxembourg Stock Exchange.

Bond types
Eurobonds can be issued in the following forms:
 * Conventional or Straight Eurobonds have a fixed interest rate and a set maturity term.
 * Floating rate bond notes (FRN) are usually short to medium term bond issues. The coupon interest rate consists of two parts.  Interest floats in relation to a benchmark rate plus an additional spread reflecting the credit risk of the security. The reference benchmark rate is usually LIBOR (London interbank offered rate) or EURIBOR (Euro interbank offered rate).
 * Zero-coupon bonds do not have interest payments. Interest is paid at the maturity date of the bond.
 * Convertible bonds can be exchanged for the common stock shares of the issuing organization. The bond issue sets a predetermined conversion price. The bondholder decides whether to convert the bond.
 * High-yield bonds are bonds rated to be below investment grade by credit rating agencies.

Risk
Eurobonds are subject to the following risks:


 * Credit risk, since the issuers are subject to default.
 * Interest rate depends on the maturity of the bond. Credit and interest rate risk is normally higher for convertible bonds than for conventional bonds.
 * Event risk  for corporate issues, as changes in company fundamental fiscal conditions can lead to changes in credit ratings.