Domestic Bonds

• Domestic bonds trade is a part of the international bond market.

Domestic bonds are dealt in local basis and domestic borrowers issue
the local bonds. Domestic bonds are bought and sold in local currency.
Foreign Bonds

In foreign bond market, bonds are issued by foreign borrowers. Foreign bonds normally use the local
currency. The concerned local market authorities supervise the issuance and sale of foreign bonds.
Foreign bonds are traded in the foreign bond markets. Some special characteristics of the foreign bond
markets are −

•Issuers of bonds are usually governments and private sector utilities.

•It is a standard practice to underwrite and organize underwriting the risks.
•Issues are generally pledged by the retail and the institutional investors.
• Eurobonds
• Eurobonds are not sold in any specific national bond market. A group
of multinational banks issue Eurobonds. A Eurobond of any currency
is sold outside the nation that has the currency. A Eurobond in the US
dollar would not be sold in the United States.
• Yankee Bonds
• These foreign bonds are U.S. dollar-denominated bonds that are issued by foreign borrowers within the American bond markets
. The issuers of these bonds are ordinarily foreign governments or entities, supranational, and corporate borrowers with high
ratings. There are certain traits associated with Yankee bonds. Take for instance the requirement by the SEC to ensure that
international bond issues are regulated and to ensure that documents are completely disclosed with all details provided. Issuers
of Yankee bonds are required to adopt American accounting practices and are required to be rated by American credit rating
agencies as opposed to foreign ones. An American domestic underwriting syndicate sponsors these bonds and must be
registered by the Securities and Exchange Board of India prior to being sold in the American domestic market. So far, Reliance
Industries Ltd. has had the most success with Yankee bonds and has secured a USD 50 million Yankee Bond issue for 50 years.
• Samurai Bonds
• These foreign bonds are issued in domestic Japanese markets by borrowers who aren’t Japanese. Borrowers are required to have
at least a minimum investment grade rating (i.e., A) and are supranational. The time frame for the maturity of these bonds
ranges between 3 to 20 years. While supranational and their entities are given priority, sovereigns along with quality private
corporations may also be permitted to issue Samurai bonds. If they happen to have Japanese trade links, they are likely to be
given more priority as well. The settlement and administrative procedures associated with these registered bonds are expensive.
• Bulldog Bonds
• These foreign bonds are available in the UK domestic securities market and are sterling denominated. The time frame needed
for maturity ranges from 5 years to 25 years or greater.
• efinition: A sovereign bond is a specific debt instrument issued by the
government. They can be denominated in both foreign and domestic
currency. Just like other bonds, these also promise to pay the buyer a
certain amount of interest for a stipulated number of years and repay
the face value on maturity.