International Bonds

Many firms borrow abroad and many investors buy bonds from foreign issuers. In addition to national capital markets, there is a thriving international capital market, largely centered in London, where banks of over 70 countries have offices.

A Eurobond is a bond denominated in a currency other than that of the country in which it is issued. For example, a dollar-denominated bond sold in Britain would be called a Eurodollar bond. Similarly, investors might speak of Euroyen bonds, yen-denominated bonds sold outside Japan. Since the new European currency is called the euro, the term Eurobond may be confusing. It is best to think of them simply as international bonds.

In contrast to bonds that are issued in foreign currencies, many firms issue bonds in foreign countries but in the currency of the investor. For example, a Yankee bond is a

38 PART I Introduction dollar-denominated bond sold by a non-U.S. issuer. Similarly, Samurai bonds are yen-denominated bonds sold outside of Japan.

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