A Eurobond is a type of bond that is issued in a currency other than the currency of the country or market in which it is issued. In other words, a Eurobond is denominated in a currency different from the one used by the country or region where it is sold. The term “Eurobond” can be a bit misleading, as it does not necessarily mean that the bond is issued in Europe. Eurobonds are issued and traded globally.

Key characteristics of Eurobonds include:

1. **Currency Denomination:**
– Eurobonds can be denominated in major currencies such as the Euro (EUR), U.S. Dollar (USD), Japanese Yen (JPY), or British Pound (GBP). The choice of currency depends on the issuer’s preference and the target market.

2. **Global Issuance:**
– Eurobonds are not restricted to European issuers or investors. They are issued by entities from various countries and can be sold to investors globally. The “Euro” in Eurobond refers to the external currency denomination, not the geographic origin.

3. **Types of Eurobonds:**
– Eurobonds come in different forms, including:
– **Bearer Bonds:** Physical possession of the bond is proof of ownership.
– **Registered Bonds:** Ownership information is recorded, and interest payments are made to the registered owner.
– **Floating Rate Notes (FRNs):** Interest rates are linked to a reference rate, often adjusted periodically.

4. **Underwriting and Placement:**
– Eurobonds are typically underwritten by an international syndicate of banks and financial institutions. They are then placed in the international capital markets.

5. **Interest Payments:**
– Eurobonds pay periodic interest to bondholders, and the interest rate can be fixed or variable. Interest payments are made in the currency in which the bond is denominated.

6. **Maturity Dates:**
– Eurobonds have specific maturity dates, at which point the principal is repaid to bondholders. Maturities can range from short-term to long-term, depending on the issuer’s needs.

7. **Interest Withholding Tax:**
– Interest income from Eurobonds may be subject to withholding tax, depending on the tax regulations of the country where the bond is issued. However, many Eurobond markets are known for reduced or zero withholding taxes.

8. **Market Liquidity:**
– Eurobonds are actively traded in the international capital markets. The secondary market for Eurobonds provides liquidity for investors seeking to buy or sell existing bonds before maturity.

9. **Use of Proceeds:**
– Proceeds from Eurobond issuances can be used for various purposes, including financing capital projects, meeting working capital needs, or refinancing existing debt.

10. **Credit Rating:**
– Eurobonds are typically assigned credit ratings by credit rating agencies to provide investors with an assessment of the creditworthiness of the issuer.

It’s important to note that Eurobonds are distinct from domestic bonds issued in a specific country’s currency. The Eurobond market provides issuers with access to a broad investor base and allows investors to diversify their portfolios with exposure to different currencies and issuers. The Eurobond market is an integral part of the global fixed-income market.