Eurobonds can be issued in up to one hundred currencies, and issuance can occur in one of two ways. The first is full settlement, meaning that a security is issued, settled, and has income and redemption payments made in that currency. Alternatively, bonds can be issued in a number of additional (emerging market and frontier market) currencies available for denomination purposes only, but with settlement, income, and redemption payments made in one of the available full settlement currencies.
- A wide range of debt instruments
Options include structured debt, sustainability bonds (including green, social and, most recently, COVID-19 bonds), Islamic finance (sukuk), convertible bonds, covered bonds, all using a variety of tenors that stretch from short-term commercial paper to perpetual bonds, and the ability to issue across a broad range of jurisdictions. No domestic markets offer comparable flexibility. The breadth of the Eurobond market enables issuers to target their funding needs to varying types of investors, enhancing their appeal and increasing their ability to raise funds in size, and at an attractive cost.
- Access to a global investor base
Eurobonds have the potential to reach thousands of investors located in more than 90 countries, including major investor centres in the U.S., Europe, and Asia-Pacific. Combined with the flexibility to issue multiple types of debt from a single programme (and in a single transaction), this depth of demand means that the market can support regular multibillion-dollar deal sizes.
- The ability to raise an issuer’s international profile
Eurobond issuance through the international capital markets enables companies to raise their profile with an international investor base, which may be beneficial to meeting strategic corporate objectives. For a company that is expanding to new markets, it can be valuable to improve their investor recognition in a target country in advance of an operational expansion. It also lays the groundwork for potentially gaining access to funds in a different currency for future mergers and acquisitions activity.
- A secure and efficient method of custody
Eurobonds always have a qualified paying agent, and a robust and reliable third-party safekeeping network is in place. Institutions appointed by the International Central Securities Depository (ICSDs), which are Euroclear Bank and Clearstream Banking Luxembourg, must pass due diligence measures to become eligible safekeeping entities. Additionally, the ICSDs function as a reliable market infrastructure, which helps to instil confidence in the notary and settlement services they provide. These measures provide investors with comfort and benefit issuers’ ability to raise funds.
