Thursday, 7 June 2012

Eurobonds (not to be confused with eurobonds)

There are many problems with the eurobond proposal being kicked around by the Hollandes and Merkels of this world. One of the least controversial, however, is that the term already exists to describe something quite different from the collective borrowing instruments currently being debated.

Eurobond has historically meant any bond denominated in a foreign currency (relative to the market in which it is issued). The currency and the market are not always European. Indeed it could refer to a dollar bond issued by a Singaporean company in Japan.  

This meaning certainly pre-dates the existence of the euro by a number of decades.  We might even waggishly suggest that it will endure after it too.

Guy Foster
Head of Portfolio Strategy

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