What is Global Bond?
375 reads · Last updated: December 5, 2024
A global bond, sometimes referred to as a Eurobond, is a type of bond issued and traded outside the country where the currency of the bond is denominated.
Definition
Global bonds, sometimes referred to as Eurobonds, are bonds issued and traded outside the country whose currency is used for the bond. This means that global bonds can be traded in multiple countries' markets without being restricted by the currency of the issuing country.
Origin
The concept of global bonds originated in the 1960s when the Eurobond market began to develop. In 1963, the Italian state electricity company issued the first Eurobond, marking the beginning of the global bond market. Since then, the global bond market has rapidly expanded, becoming an important tool for international financing.
Categories and Features
Global bonds can be classified based on the currency of issuance, the market of issuance, and the issuing entity. Common categories include US dollar global bonds, Euro global bonds, etc. Their features include cross-border issuance, high liquidity, and diverse investors. The advantages of global bonds are attracting international investors and reducing financing costs, but they also face exchange rate risks and regulatory complexities.
Case Studies
A typical case is the issuance of global bonds by Coca-Cola in the 1980s. By issuing bonds in multiple markets, Coca-Cola successfully raised significant funds to support its international expansion. Another example is Toyota Motor Corporation's issuance of global bonds in 2010, which helped it make capital investments and expand its business globally.
Common Issues
Common issues investors might face when using global bonds include risks from exchange rate fluctuations, differences in tax and legal regulations across countries, and insufficient market liquidity. Investors should carefully assess these risks and make investment decisions based on their risk tolerance.
