A eurodollar bond is a bond denominated by the U.S. dollar which is issued in a country other the United States. Although eurodollar bonds are denominated by the U.S. dollar, they are not regulated by the U.S. government but by the laws of the country in which they are sold.
The term is often used synonymously with the term eurobond. However, eurobond can be used in a broader sense to include all bonds issued in currencies other than those of the countries in which they are issued. For example, euroyen bonds (denominated by the Japanese yen) are also eurobonds. The term eurodollar bond specifically denotes U.S. denominated bonds issued outside of the U.S.
The first eurodollar bonds – issued in the Netherlands – were sold in Luxembourg with the backing of banks in the United Kingdom in order to raise funding for the construction of highways in Italy by Italian logistics and civil engineering firm Autostrade. These bonds allowed investors to invest U.S. dollars in non-U.S. investments and earn returns in U.S. dollars. Before the first eurodollar bonds were issued, there were few ways to legally, securely invest U.S. dollars outside of the United States.
See also: Yankee bond
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