Eurobonds

In: Business and Management

Submitted By elemassu
Words 1743
Pages 7
The bond market is a less known in the financial world than the share market, but it doesn’t mean that it is not as important as the share one in terms of volumes. The main reason may be that the Governments are a big part of this market. Because unlike a share, a bond is a debt contract not a proportion of capital.
Usually, the international bond market is divided in three entities: the domestic bonds, the foreign bonds and the Eurobonds. The Eurobonds segment of the international market is, according to David. L. Scott and almost all dictionaries “a type of foreign bond issued and traded in countries other than the one in which the bond is denominated.”
This paper is going to focused on this particular bond issued by a particular issuer: The Eurobonds issued by Government. Why do governments issue such an instrument and why investors are more willing to buy it?
It would remind, first the history of Eurobonds and why do the Governments are issuing those bonds , and then try to understand why do investors are interested in this type of bond, to reach the idea that there may have some boundaries to it.

I
The best way to introduce the subject might be by retracing it History in a Governmental point of view:
After a slow start, the Eurobond market has grown to become a major force in the international securities markets, in part due to their tax-free status and ease of trading. Eurobonds is a market for big issuers; large institutional clients, big life insurance, and Governments

Claes, A, (2002, p.378), Anatomy of the Eurobond Market 1980–2000.
According to these figures, Governments are the number three using such a bond, that’s why it could be interesting to know, why they use it and what are the other ways they have to find funds.
Governments need to borrow money to make their countries work. Of course this is not the first way for them to…...

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