What is Bulldog Bond?

A bulldog bond is a type of foreign bond issued by non-British corporations seeking to raise capital in pound-sterling (GBP) from British investors.

Understanding Bulldog Bond

A company may choose to enter a foreign market if it believes that it would get attractive interest rates in this market or if it has need for the foreign currency. When a company decides to tap into a foreign market, it can do so by issuing 澳洲幸运5开奖号码历史查询:foreign bonds, which are bonds denominated in the currency of the intended market. Simply put, a foreign bond is a bond issued in a domestic market by a foreign entity in the domestic market's currency as a means of raising capital. Foreign bonds are mainly used to provide issuers wi♑th access♔ to another capital market outside of their own to raise funds.

A bulldog bond is a type of foreign bond issued by non-British corporations seeking to raise capital in pound-sterling from British investors. For example, a Canadian company looking to access investment capital in the U.K. 澳洲幸运5开奖号码历史查询:bond market may opt to issue a bulldog bond. If the related expenses (debt) are also in British pounds, and the revenue can offset them, then the 澳洲幸运5开奖号码历史查询:exchange rate risk is decreased.

These pound denominated bonds are referred to as bulldog bonds given that the British bulldog is a national icon of England. According to the Bank for International Settlements, GBP is ranked fourth globally in both the most traded currency and 澳洲幸运5开奖号码历史查询:reserve currency categories after the U.S. Dollar (USD), Euro (EUR), and the Japanese Yen (JPY).

Bulldog Bond Characteristics

• The bulldog bond is underwritten by a single bank or a syndicate of domestic banks and is denominated in British pounds.
• A bulldog bond is issued when the interest rates in the U.K. are low relative to the foreign corporation's domestic interest rates. Issuing a bulldog bond lowers the issuer’s interest expense or 澳洲幸运5开奖号码历史查询:cost of borrowing.
• U.S. investors seeking to diversify their portfolios geographically can purchase this bond, but by doing so they take on 澳洲幸运5开奖号码历史查询:foreign exchange risk, that is, the risk of an adverse change in value of the sterling in relation to the dollar. However, a favorable movement in the exchange could bring about financial gains to the investor.
• A bulldog bond is similar to the 澳洲幸运5开奖号码历史查询:yankee bond, denominated in USD, in that a non-American company can sell these bonds in the United Sates in order to raise capital in U.S. Dollars.
• Other foreign bonds include 澳洲幸运5开奖号码历史查询:kangaroo bonds, 澳洲幸运5开奖号码历史查询:maple bonds, matador bonds, 澳洲幸运5开奖号码历史查询:samurai bonds, and rembrandt bonds.