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Eurobond

A eurobond is a long-term debt instrument that a government or company issues in international markets, usually in dollars or euros. The best-known eurobonds in Türkiye are the foreign-currency bonds the Ministry of Treasury and Finance issues in international capital markets under its external financing programme.
Contents
  1. 1.Key points
  2. 2.Formula / calculation
  3. 3.Worked example
  4. 4.Interpretation
  5. 5.Pitfalls
  6. 6.Official sources
  7. 7.Frequently asked questions

Key Points

  • Banks and large companies also issue eurobonds.
  • Eurobonds serve as an alternative to FX deposits for investors seeking foreign-currency interest income.
  • selling before maturity can lead to losses from changes in rates and risk premium.

Formula / Calculation

eurobond prices are quoted as a percentage of face value (e.g. 98.50). The investor’s currency return = Coupon income + Price change; the lira return also includes the exchange rate change.

Worked Example

Illustrative

Buy a eurobond with USD 100,000 face value and a 7% annual coupon at 98.00 and sell it a year later at 99.50: the dollar return is (7,000 + 1,500) / 98,000 ≈ 8.7%. If USD/TRY rises 20% over the same period, the lira return is about (1.087 × 1.20) − 1 ≈ 30.4%.

The figures are hypothetical values chosen to explain the concept; they are not data for any real fund, stock or market.

Interpretation

The “euro” in the name refers to issuance abroad, not the currency.

Eurobonds serve as an alternative to FX deposits for investors seeking foreign-currency interest income. Prices respond to US and euro area rates and to changes in Türkiye’s risk premium.

Pitfalls

selling before maturity can lead to losses from changes in rates and risk premium. Minimum trade sizes can be high and bid-ask spreads vary between banks. Tax treatment can differ by investor; check the current rules before trading.

Official Sources

Official regulation and sources the definition is based on.

Pages Where This Term Appears

Related Terms

Frequently Asked Questions

A eurobond is a long-term debt instrument that a government or company issues in international markets, usually in dollars or euros.

eurobond prices are quoted as a percentage of face value (e.g. 98.50). The investor’s currency return = Coupon income + Price change; the lira return also includes the exchange rate change.

Prepared by: Yatırımcı.AI Research TeamLast reviewed: Method: MethodologyEditorial policy