Eurodollar bond introduction and background |
Eurodollar bonds are a broad category of debt security that includes any non-US debt instrument denominated in dollars. The name predates the existence of the Euro, which has become a source of potential confusion. Eurodollar bonds were invented in London and frequently issued in Europe but can be offered by any company or government worldwide.
Eurodollar bonds can have any characteristics of other bonds, as they may be issued by anyone. What unites them is that they take non-US debt and use it to create a dollar yielding coupon stream, making them highly attractive for foreign investors seeking US Dollar income. Eurodollar bonds must be held outside of the US.
The yield of Eurodollar bonds depends completely on the nature of the underlying debt security. Their yield is influenced by issuer credit rating, interest rates, coupon, and time to expiry.
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