CHAPTER 4 – International Bond Market
In this essay, we will take a look at how the international bond markets work and some key terms investors should know.
Most countries around the world issue bonds to raise capital for public works. While running a persistent deficit is unsustainable, many countries require temporary funding during hard economic times. Other countries reinvest in ways that promote economic growth which makes repayment of bonds easier in the future given the higher potential tax revenue. it is important to define what a bond is. A bond is a debt instrument requiring the issuer a business, a bank, an international organization, or a government to repay to the investor (the lenders) the amount borrowed plus interest (coupon rate) over a specified period. Terms are contractually fixed. Bonds issued specify a fixed date when amount borrowed is due and a remuneration (which may be fixed or variable) indexed to interest rate and not the result of the company. Default risk is reflected in yields. Indeed, the higher yields the bond provides, the more risky the investment. In order to attract investors, companies offer a higher return than the government. The bond rating help in estimating the default risk

Domestic bond market: the bonds are issued by a domestic borrower in his own country. Most of time, we can find bonds denominated in the local currency.
Foreign bond market: a foreign borrower issues bonds on another market than his local market. Most of time, we can find bonds denominated in the local currency. Exchanges of bonds issued by a foreign entity are under local market authorities’ control.

We have to determinate what a Eurobond is. The word "Eurobond" might be misunderstood. Indeed, Eurobonds do not mean bonds of European countries or euro-denominated bonds.
EXAMPLE:
Usually, some large firms issue Eurobonds to raise funds in