Eurodollar Bonds Definition

Definition

The word Eurodollar bond identifies some collateral delivered in United States dollars with way of a financial institution or business located not in the United States. Euro dollar bonds have been issued if a business wants to raise funding from shareholders positioned in foreign nations.

Explanation

When a business or government wants to raise capital from shareholders located in yet another nation they will have the option of issuing what are called Eurodollar bonds. These securities have been issued in United States dollars (USD) with a institution that’s not located from the ‘s country. By way of instance, a German bank holding bonds issued in USD by a French company could be holding a Eurodollar bond.

There was a misconception which Eurodollar bonds have been issued in euro. The expression is in fact produced from the positioning (London, England) at which the concept was initially developed. These bonds have been traded, issued, and kept during the whole world, not merely in Europe.

The price of devoting Eurodollar bonds is significantly leaner compared to the usual dollar-denominated bond issued by a foreign firm within the United States. As they’re issued at a non-U.S. nation, they usually do not need to be enrolled with the Securities and Exchange Commission (SEC). This enriches the total cost to set these securities on the current market, that permits these bonds to take marginally lower interestrates too.