Eurobonds

newsaver2008

I don't know why these haven't been mentioned on the forum. Are these not a popular form of investment in the UK?

purch

Do you know what they are ?

Fixed Interest Securities are mentioned frequently on this forum if you care to search.

newsaver2008

Purch, sorry I didn't but thanks:) To me, a 'bond' is either a corporate bond or a bond which is really a fixed term account!:)

tradetime

newsaver2008 wrote: »

Purch, sorry I didn't but thanks:) To me, a 'bond' is either a corporate bond or a bond which is really a fixed term account!:)

LOL, you'll get lynched, a fixed term deposit should be called just that, calling it a bond as banks have chosen to do creates quite a bit of confusion, and I'm sure the average saver would be quite happy if it were simply known as a fixed term deposit.

Bonds are debt securities, issued by both corporations and governments offering fixed interest rates.
I suppose one might be able to make a claim that any fixed rate account is similar to a bond, but unlike bank deposits bonds (the real type) have no guarantee.

newsaver2008

Thanks:) I bought a dollar Eurobond a few months ago in Turkey at a good rate but since then the Central Bank of Turkey have been rate cutting. In that case I understand that a Eurobond's interest rate must be linked to the country of issue's base rate? I ask because my brother and sister in law here in the UK have been asking me (!) for investment advice and I recommended Eurobonds to them.

tradetime

newsaver2008 wrote: »

Thanks:) I bought a dollar Eurobond a few months ago in Turkey at a good rate but since then the Central Bank of Turkey have been rate cutting. In that case I understand that a Eurobond's interest rate must be linked to the country of issue's base rate? I ask because my brother and sister in law here in the UK have been asking me (!) for investment advice and I recommended Eurobonds to them.

Can't say I am personally familiar with eurobonds other than what they are, I would have thought the interest rate was fixed however.

purch

A Eurobond is just the term for a Bond issued in a currency other than that of it's country of origin.

A Sterling Bond issued by the European Investment Bank or World Bank is termed a Eurobond.

A Bond denominated in USD issued by a British company i.e. Vodafone would also be a Eurobond

The word Euro stuck in front of most things refers to instruments traded in markets outside their domicile.

Thus Eurodollars refer to USD traded outside of America.

Since the inception of the currency EUR the waters have been "muddied" slightly, but the case has been for many years that the word Euro was stuck infront of any instrument in a currency other than that of the place where it is traded.

Euro instruments all work on a 360 day year for interest calculations, and settle on the Spot date which is two working days beyond the trade date.

Thus all interbank FX trading uses Euro rather than Domestic funds.

P.S. I've had a lager or two so I might be rambling a little !!!!!!

newsaver2008

Purch - I'm on the Chivas Regal now - cheers:))))
I suppose I framed my original question badly. I wondered why people here don't invest in them - or don't seem to. Is it because they follow the bank base rate of the country in which they are issued? I am with a Turkish bank (I live there) and Eurobonds are a very popular investment there. Also, the Turkish banks don't have such things as ISA's (obviously as different tax system) and they don't have fixed rate Bonds issued by their banks because the lira is an unstable currency. The 2 fixed rate investments are Treasury Bills or bonds and eurobonds.

purch

I think the confusion here, is caused by calling Fixed Rate Bonds issued in the currency EUR a Eurobond, when actually that term refers to a different instrument altogether.