Eurobonds are bonds that are issued in countries other than the country of the currency in which they are denominated. For example, the Kenyan government could issue a USD-denominated bond in the UK.
Another example is a Euro-LCC bond, i.e. a bond that is denominated in LCC and is issued in another country. These bonds are normally created by institutions that have a better rating than the country’s (i.e. Local Country’s) sovereign rating; an example is a Euro-LCC bond issued by the World Bank and sold in the US.
It should be noted that the word Euro in Eurobond is a misnomer because a Eurobond does not have to be issued in Europe or the Euro-zone. This market first emerged in 1963, when USD-denominated bonds were issued in Europe in order to avoid onerous regulation and taxes; hence the term Euro in Eurobond. When the regulations were amended, the market had grown to such an extent that it continued to operate.
The Eurobonds market generally is a retail market (i.e. the denominations are small – usually $5 000 and $10 000), with the bonds issued in bearer form, and it is driven by individuals, who wish to conceal their ownership of the bonds from their respective receivers of revenue, and other investors. Investment banks that have an international presence usually undertake the placing in the Eurobonds market.
