Dual Currency Issue

Dual Currency Issue

A eurobond that pays interest (makes coupon payments) in one currency but pays the principal in a different currency.

Notes:

There are three methods used in applying the exchange rate to principal and interest payments from dual-currency bonds:

1. Use of the prevailing exchange rate at the bond's issuance.

2. Use of the existing exchange rate (spot rate) at the time cash flow payments are made.

3. The use of the currency that is chosen from the two currencies by the investors or issuers of these bonds. Also known as an option currency bond.

See also: Eurobond, Exchange Rate, Spot Price