Eurobond
A Eurobond is a bond issued in a currency other than that of the country in which it is issued, sold simultaneously in multiple national markets through an international syndicate of underwriters, and not subject to the withholding tax and regulatory requirements of any single national market.
Despite the name, Eurobonds have no necessary connection to Europe or the euro currency — the prefix refers to the offshore, multi-jurisdictional nature of the market. A US dollar Eurobond (also called a Eurodollar bond) is a dollar-denominated bond issued outside the United States by a non-US or US entity in the international capital markets. Similarly, a euro-denominated bond issued outside the eurozone is a Eurozone Eurobond, and a sterling bond issued outside the UK is a Eurosterling bond.
The Eurobond market developed in the 1960s partly in response to US capital controls (the Interest Equalization Tax of 1963 imposed a tax on US residents purchasing foreign securities, pushing dollar borrowing offshore) and partly because issuers and investors valued the lighter regulatory environment. Eurobonds are typically issued in bearer form (historically, though dematerialized settlement is now standard), exempt from withholding tax at source, and governed by English or another internationally recognized legal system.
Issuance is conducted through international syndicates of investment banks, with bonds listed on the Luxembourg Stock Exchange or London Stock Exchange (primarily for regulatory compliance purposes) and settled through Euroclear or Clearstream. The process has become standardized: a mandate is given to lead managers, a roadshow presents the deal to investors, books are built, pricing is set, and the bond prices within 24-48 hours for investment-grade issuers.
Major issuers of Eurobonds include multinational corporations, sovereign governments, supranational organizations (World Bank, European Investment Bank, Asian Development Bank), and financial institutions. For US companies, issuing Eurodollar bonds provides access to the deep pool of dollar-denominated demand from Asian, Middle Eastern, and European central banks and institutional investors that cannot or prefer not to invest in SEC-registered US domestic bonds.
For investors, Eurobonds typically require minimum denominations of $100,000 or $200,000, reflecting their institutional orientation. Retail access is primarily through mutual funds or ETFs that hold diversified portfolios of international bonds.