A bond denominated in U.S. dollars issued by a non-American company outside of the United States and the issuer's home country. It is important to note that these are traded worldwide, not just in Europe. Like other Eurocurrency securities, Eurodollar bonds are subject to fewer regulatory restrictions because the central bank that issued the currency (in this case, the U.S. Federal Reserve System) does not have any jurisdiction over the dollars because the bonds are issued and traded outside the U.S. For example, a Japanese company may issue a Eurodollar bond to attract foreign investors for its financing needs. Eurodollar bonds are one of the more common eurocurrency bonds because of the international importance of the dollar. See also: Eurobond, Eurodollar.
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A dollar-denominated bond sold to investors outside the United States. These securities allow buyers to benefit, or lose, from variations in currency exchange rates. A Eurodollar bond is an example of a Eurobond.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.