Modern World Investment Tools: Eurobond
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What Is Eurobond?
Eurobond is usually long term debt instrument presented for sale by government or institutions through foreign currencies in the international markets for foreign borrowing. It is an instrument oriented at investors preferring to value their savings in foreign currency investment instruments and thinking of investing for a long term.
What Are the Specifications of Eurobond?
It is generally issued in USD or EUR.
Maturity is generally between 5-30 years. Coupon payments are semi-annually for USD bonds and annually for EUR bonds. Interest of the coupons is stated as annual ordinary interest. Standard transaction time is Date+3 working days for transactions with value date. The minimum amount determined by the Bank for Eurobond sales is USD 10,000.
Advantages of Eurobond
- It is an investment instrument suitable for persons or companies wanting to invest in foreign currency for long terms.
- It is traded in international markets.
- It provides regular cash flow to the investor by making coupon payments in certain periods. Coupons generally have fixed interest. Capital and coupon payments are made in the currency that they are issued.
- Despite Eurobonds are long term investments, they present advantage of liquidation before the end of maturity as in Treasury Bills and Government Bonds.
- Eurobond return is higher compared to other currency investments; however, as it is traded in international markets, it is open to fluctuations in price that can be caused by both domestic and foreign economic and political developments. Thus, principal risk can be faced.
- Deduction of withholding is not performed for Eurobond coupon payments.
Detailed Information on Eurobond
You can learn all the detailed information on Eurobonds from QNB Finansbank Branches, or by calling 0850 222 0 900 Finansbank Telephone Banking.
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