A Eurobond is an international bond

Bond (finance)

In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest to use and/or to repay the principal at a later date, termed maturity...

 that is denominated in a currency

Currency

In economics, currency refers to a generally accepted medium of exchange. These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation's money supply...

 not native to the country where it is issued. It can be categorised according to the currency in which it is issued. London is one of the centers of the Eurobond market, but Eurobonds may be traded throughout the world - for example in Singapore

Singapore

Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...

 or Tokyo

Tokyo

, ; officially , is one of the 47 prefectures of Japan. Tokyo is the capital of Japan, the center of the Greater Tokyo Area, and the largest metropolitan area of Japan. It is the seat of the Japanese government and the Imperial Palace, and the home of the Japanese Imperial Family...

.

Eurobonds are named after the currency they are denominated in. For example, Euroyen and Eurodollar

Eurodollar

Eurodollars are time deposits denominated in U.S. dollars at banks outside the United States, and thus are not under the jurisdiction of the Federal Reserve. Consequently, such deposits are subject to much less regulation than similar deposits within the U.S., allowing for higher margins. The term...

 bonds are denominated in Japanese yen and American dollars respectively. A Eurobond is normally a bearer bond

Bearer bond

A bearer bond is a debt security issued by a business entity, such as a corporation, or by a government. It differs from the more common types of investment securities in that it is unregistered – no records are kept of the owner, or the transactions involving ownership. Whoever physically...

, payable to the bearer. It is also free of withholding tax

Withholding tax

Withholding tax, also called retention tax, is a government requirement for the payer of an item of income to withhold or deduct tax from the payment, and pay that tax to the government. In most jurisdictions, withholding tax applies to employment income. Many jurisdictions also require...

. The bank will pay the holder of the coupon the interest payment due. Usually, no official records are kept. The word Eurobond was originally created by Julius Strauss.

The first European Eurobonds were issued in 1963 by Italian motorway network Autostrade

Autostrade of Italy

The Autostrada is the Italian national system of motorways. The total length of the system is about 6,400 km. In North and Central Italy this is mainly as tollways, with the biggest portion in concession to the Atlantia group which operates some 3,408 km...

. The $15 million six year loan was arranged by London bankers S. G. Warburg

S. G. Warburg & Co.

S. G. Warburg & Co. was a London-based investment bank. It was listed on the London Stock Exchange and was once a constituent of the FTSE 100 Index but it was acquired by Swiss Bank Corporation in 1995.-Founding and early history:...

.

The majority of Eurobonds are now owned in 'electronic' rather than physical form. The bonds are held and traded within one of the clearing systems (Euroclear

Euroclear

Euroclear is a user owned and governed Brussels, Belgium based financial services company that specializes in the settlement of securities transactions as well as the safekeeping and asset servicing of these securities. It was founded in 1968 as part of J.P...

 and Clearstream

Clearstream

Clearstream Banking S.A. is the clearing and settlement division of Deutsche Börse, based in Luxembourg and Frankfurt. Clearstream was created in January 2000 through the merger of Cedel International and Deutsche Börse Clearing...

being the most common). Coupons are paid electronically via the clearing systems to the holder of the Eurobond (or their nominee account).