Yankee Bonds
The term “Yankee” refers to the fact that these bonds are sold in the United States but are not necessarily limited to any particular currency.
These bonds are usually denominated in U.S. dollars, but may also be denominated in other currencies such as the Canadian dollar (CAD), Great Britain pound sterling (GBP), Australian dollar (AUD), or New Zealand dollar (NZD).
Yankee bonds are often issued by companies in countries such as Ireland or Canada that need to raise money in U.S. dollars but may have difficulty doing so within their own country because of some crisis (such as an economic recession).
Ireland, for example, issued a Yankee bond post-2008 to raise money in the U.S. markets due to the difficulty of raising money in its own market at that time (due to the Irish Government debt crisis).
A Yankee bond may also be referred to as a Eurobond issued in U.S. dollar markets.
The Eurobond market is one of the largest and most liquid fixed-income securities markets worldwide.
It is an important source of financing for foreign companies wishing to tap into international capital markets.
This is a result of lower interest rates than what might be available if they were only able to issue bonds within their domestic currency or local market environment.
Reverse Yankee bond
A reverse Yankee bond is a dollar-denominated bond issued outside of the United States by an American company.
There are tax benefits for American investors who purchase such securities that are not available if they purchase similar securities issued inside of the United States.
While Yankee bonds are a type of bond issued by foreign companies through American markets, Maple bonds are bonds sold by American companies on foreign markets such as Canadian markets.
Summary
Yankee Bonds are a type of bond issued by foreign companies in U.S. dollars. They can also be referred to as Eurobonds. The name comes from the fact that they are intended for sale in the United States.
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