A 

foreign bond (called Yankee bond in the US, Samurai bond in Japan, Bulldog bondin the UK) is a
bondissued in a country's national bond market by an issuer not domiciled in thatcountry where
those bonds are subsequently traded.

 Regulatory authorities in the country where the bond is issued impose rules governing the
issuance of foreign bonds.
 Issuers of foreign bonds include national governments and their subdivisions, corporations,
and supranationals (an entity that is formed by two or more central governments through
international treaties).
 They can be denominated in any currency.
 They can be publicly issued or privately placed.

Eurobonds have the following features:

 underwritten by an international syndicate.

 offered simultaneously to investors in a number of countries at issuance.
 issued outside the jurisdiction of any single country. Therefore, they are not registered
through a regulatory agency.
 in practice they are typically registered on a national stock exchange. Why? Some
institutional investors are prohibited from purchasing securities that are not registered on
an exchange. The registration is mainly intended to overcome such restrictions. However,
most of the Eurobond trading occurs in the over-the-counter market.
 Make coupon payments annually.

Types of Eurobonds:

 There are a large variety of Eurobonds with different features. For example, deferred-
coupon bonds, step-up bonds, dual currency bonds, etc.
 If an Eurobond is denominated in US dollars, it is called Eurodollar bond. Example: A US$
bond issued by Ford and sold in Japan.
 "Plain vanilla", fixed rate coupon bonds are called Euro straights, which are unsecured
bonds.

A global bond is a debt obligation that is issued and traded in both the USYankee bond market and
the Eurobond market. Issuers of global bonds typicallyhave high credit quality, and have large fund
needs on a regular basis. Thefirst global bond was issued by the World Bank. Example: A US$ bond
issued bythe Canadian government, and sold in the US and Japan.

Sovereign debt is the obligation of a country's central government. Compared withgovernment

debt obligations by entities in a particular country, sovereign debtof that country have lower credit
risk and greater liquidity. Government canraise funds by issuing foreign bonds, Eurobonds and
domestic bonds, or byborrowing from banks through syndicated bank loans.

Governments use the following methods to issue new debt:

 Regular auction cycle/single-price method: this is the same method used by the US

Treasury.
 Regular auction cycle/multiple-price method: this method is similar to the one used by
the US Treasury, except that winning bidders are awarded securities at the yield they bid,
not at the stop yield.
  Ad hoc auction method: auctions are announced when market conditions are favorable.
 Tap method: bonds from a previously outstanding issue are auctioned.

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Bonds can be classified into 5 types depending on the type of issuer. These are
as follows:

1. Domestic Bonds

Domestic bonds are bonds which are issued within the domestic market and are
denominated in the domestic currency.These are issued by a local borrower.For
instance, State bank of India issuing bonds to Indian residents.

2. Foreign Bonds

These types of bonds are again denominated in domestic currency and in the
local market, only difference being a foreign borrower.Examples are:

Yankee bonds: Issued in US by a foreign borrower and are denominated in US

Samurai bonds: Issued in Japan by a foriegn borrower and are denominated in
Japanese Yen

3. Eurobonds

Eurobonds are bonds which are denominated in foreign currency and are issued
by a foreign firm and sold to the home country residents. For instance, A US
denominated bond issued by a US firm in UK is a euro bond.

4. Global bonds

These bonds are sold to many other markets as well as euromarkets. Global
bonds can be issued in same currency as the country of issuance, which is not
the case with euro bonds,

5. Floating Rate bonds

Floating rate bonds are popularly known as floaters and are bonds interest rates
of which depends on some reference rate. For example, coupon rates based on
LIBOR can be LIBOR+ Quoted margin. These interest rates are then reset
periodically. In other words, coupon rates are based on the rate calculated on
the reset date.
Floaters can have special features like caps, floors and collars.

Caps: It specifies the maximum coupon rate of the floater. This is attractive for
the issuer as it restricts his liability and is therefore not so attractive for the
investor.

Floors: Similar to caps, floors specify the minimum rate of coupon and is
therefore attractive for the investor.

Collars: These are combinations of caps and floors.

There are also floaters known as Inverse Floaters. They are different from
regular floaters in that they have coupn rates which are based on opposite
direction of reference rate. They can be represented as (some fixed percentage)-
reference rate.

There can also be Dual Indexed floaters which are based on more than one
reference rates.