Eurobond | Fixed Income Securities | Investment Products | HSBC (2024)

FAQs

What is a Eurobond income? ›

A Eurobond is a fixed-income debt instrument (security) denominated in a different currency than the local one of the country where the bond's been issued. Hence, it is a unique type of bond. Eurobonds allow corporations to raise funds by issuing bonds in a foreign currency.

Any time the bond is denominated in a currency different than the origin country, it is a Eurobond; for example, even if a Japanese bond is denominated in US dollars instead of yen, it is a Eurobond. Eurobonds, like other types of bonds, can be issued by governments or corporations.

Bonds, such as U.S. Treasuries and corporate or municipal bonds, are traditional types of fixed income investments.

Eurobonds are usually long-term debt instruments. Eurobonds are typically denominated in US Dollars (USD). Euro, Pound, Japanese Yen, Swiss Francs and other currency denominated Eurobonds are also available.

The risk for Eurobonds is different since the bonds are not denominated in the issuers' currency. In this case, the issuers' source of foreign exchange comes into focus. Issuers of Eurobonds that do not have a stable source of foreign exchange are at a high risk of defaulting.

You can buy Eurobonds on the website and via the Freedom24 mobile app. On the website, go to your personal account and select the "Trade request" section. There, specify the ticker and the number of Eurobonds.

A eurobond issue may be used to finance a company's expansion into a foreign market. The bond raises the money needed in the currency that is needed, without the forex risk. An investor may gain exposure to a foreign market while investing in an established domestic company.

A basic feature of the eurobond market is that the securities issued are all bearer rather than registered, and no tax is witheld on interest payments. In addition in most cases companies can offset the cost of interest payments against their taxable income in the home country.

Regulation: Eurobonds are not subject to the law by a single country's financial authorities, while foreign bonds are subject to the rules of the country where they are issued. Issuance Location: Eurobonds can be issued anywhere globally, while foreign bonds are issued in a specific foreign country.

What is the meaning of income securities? ›

Fixed-income securities are debt instruments that pay a fixed rate of interest. These can include bonds issued by governments or corporations, CDs, money market funds, and commercial paper. Preferred stock is sometimes considered fixed-income as well since it is a hybrid security combining features of debt and equity.

An income bond is a type of debt security in which only the face value of the bond is promised to be paid to the investor, with any coupon payments paid only if the issuing company has enough earnings to pay for the coupon payment.

A distinctive feature of the Eurobonds is the assigned ISIN-code starting mainly with XS / US-symbols. However, some international bonds have ISIN codes started from another symbols, for example RU, DE, CH.

Eurobonds are the bonds denominated in a currency other than that of the country in which they are issued. A bond denominated in Japanese Yen and issued in the UK, or a bond denominated in US dollars and issued in France or the UK are examples of Eurobonds.

Benefits and features of the Euro Bond Fund:

Open-ended funds; they are open for new and additional investment. Minimum holding period of 30 days. Minimum Subscription: Minimum of 10 units and multiples of 5 units thereafter. Minimum entry amount: US$1,000.00 and thereafter multiples of $500.00.

Bonds are issued by governments and corporations when they want to raise money. By buying a bond, you're giving the issuer a loan, and they agree to pay you back the face value of the loan on a specific date, and to pay you periodic interest payments along the way, usually twice a year.