Question

In: Finance

In 300 words, describe the characteristics common to international bond investing.

In 300 words, describe the characteristics common to international bond investing.

Solutions

Expert Solution

International bonds are bonds issued by a country or company that is not domestic for the investor. The international bond market is quickly expanding as companies continue to look for the cheapest way to borrow money. By issuing debt on an international scale, a company can reach more investors. It also potentially helps decrease regulatory constraints.

The three categories of international bonds are domestic bonds, Eurobonds, and foreign bonds. Under dollar-denominated bonds, there are Yankee bonds and Eurodollar bonds. Non-dollar denominated bonds are sold and traded in domestic markets, foreign markets, and Euro markets.

International bonds are very much suitable for diversifying the portfolio at the international scale, gaining exposure into foreign securities, high returns and if the investor wants to hedge his exposure in a foreign economy. But at the same time, International bonds bring up the currency and country-specific risks. Also, Investor has to be aware of international market concerns as well as geopolitical and economic risks before investing in such bonds.

Referred from Google


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