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Investment Dictionary


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Eurobonds

 

Eurobonds are bonds that are issued in other that home currency. It does not mean that Eurobonds have to be denominated in Euros. Actually, most of the Eurobonds that are issued in Europe are in denominated in US dollars.

 

Eurobonds issued by governments are liked by professional fixed income investors because if country issues bonds in its home currency, it has full control of money supply and could easily devalue the currency by placing more money in to the circulation. In other words, government could simply print new money to repay its debts. But that is not possible by Eurobonds because they are issued in another currency than local currency. Of course, every government still could issue some new money and exchange it in to another currency (as long as currency keeps value), but for the investor it is important that real value of the bond denomination currency would not change much.






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