Why do Eurobonds appeal to investors?

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Why do Eurobonds appeal to investors?


Why do Eurobonds appeal to investors?

Explanation & AnswerSolution by a verified expert


A euro bond is issued in one country and denominated in the currency of some other country. Euro bonds are more popular among investors due to many reasons.

Investment in euro bonds requires a lower level of disclosure. The names and nationalities of the investors are not registered as these bonds are issued in bearer form. Thus, it helps the investor to maintain secrecy and plan optimise tax liability. hide his income.
The domestic governments cannot regulate the issuance of eurobonds, as a result there are very less transaction costs. Moreover limited disclosure requires only nominal transaction costs.
It is a universal business sentiment that eurobonds are purchased by most of the credible investors in the foreign market. As a result, the government is less stricter in regulatory compliances when it comes to trading of eurobonds. Such a relaxation helps to optimize the time which is usually spent on regulatory compliances.
Interest earned on eurobonds is exempted from tax by most of the government. Thus, the exposure to the taxation risk is eliminated.

Verified Answer

The bond which is issued in the home country by denominating in foreign currency is referred to as a euro bond. For instance, an australian company issuing bonds in Australia denominated in US dollars will qualify as euro bonds.  Most of the investors prefer eurobonds over domestic and foreign bonds because transaction costs are low, lower levels of disclosure are required. Also, it doesn't come under government regulations, and interest earned on eurobonds is exempted from tax.

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