Eurobonds

Eurobond Placement on International Markets

Eurobonds are a foreign currency instrument of public debt financing without pledge of assets and/or cash flows. They are one of the most widely used eurosecurities. Europsecurities, in a general sense, are securities placed by a non-resident issuer in a foreign country in association with resident underwriters and denominated in the currency of such country.

Eurobond issue helps to understand interests of foreign and Russian investors to the issuer company, start an international public credit history, gain experience of cooperating with foreign investors, lawyers and other organizations engaged in the international capital market, and structure in-house procedures. The issuing company expands its investor and partner base both in terms of quantity and quality and diversifies its funding sources.

Eurobond Specifics

• Eurobonds are normally bearer bonds.
• Eurobonds are offered simultaneously on several national markets and not necessarily denominated in the national currency of the investor or issuer.
• Eurobonds are placed by an underwriting syndicate which is usually represented by banks from different countries.
• Eurobonds are issued and placed under the rules and practices established in the market. Most of the eurobond issues are not secured, though sometimes security is provided as third party guarantees or as the issuer's assets.
• Eurobonds are issued under additional terms and conditions to reduce risks of the securities holders. The so-called negative pledge is the most widely spread condition. It prevents the issuer from issuing other preference securities.
• The bond issue is generally conditional on the issuer's covenants to maintain its debt leverage and limit other debt issues within a certain time period.
• Eurobond yield is paid in full, without tax withholdings at source in the issuer's country. If the yield payable by the issuer is subject to tax withholdings under the local regulation, the issuer is obliged to gross up its yield payments to the investor.

Contact information:

Spotlights