Eurobond

Definition

A Eurobond is a bond issued in a foreign currency (commonly USD) by a government or company and sold to international investors. For Nigerian investors, Eurobonds add USD exposure and FX risk/hedge.

Key Takeaways

• Issued in non-local currency (e.g., Nigeria issues USD Eurobonds).

• Pays coupons and principal in that foreign currency.

• Access via international brokers or local channels that offer Eurobond desks.

• Consider FX risk, liquidity, minimum sizes, and custody arrangements.

• Yields reflect issuer credit, tenor, and global USD rates.

Why it matters (Nigeria)

• Useful for USD income or FX diversification.

• Convert NGN to USD to invest; watch conversion costs and settlement details.

Common Pitfalls

• Underestimating currency risk vs NGN expenses.

• Ignoring withholding/tax and custody/transfer fees.

• Comparing yields to NGN bonds without adjusting for FX and inflation.

Related Terms

Bond · Coupon · Yield to Maturity (YTM) · Duration · FX Risk · Sovereign · Corporate Bond