A samurai bond is a bond which is issued in Japan by a foreign borrower and is denominated by the Japanese yen. Samurai bonds make it possible for non-Japanese borrowers to sell bonds in Japan in order to tap into the Japanese capital market.
Because Samurai bonds are denominated by the Japanese yen, investors can invest in non-Japanese companies or governments without having to exchange their yen into a foreign currency. They also earn interest in Japanese yen. This cuts out the risk of fluctuations in currency exchange rates.
Because Samurai bonds are issued in Japan and traded on Japanese exchanges, they are subject to Japanese regulatory and reporting requirements. This provides an additional advantage for investors who want to invest in foreign bonds but within an established regulatory framework.
Samurai bonds differ from euroyen bonds, which are bonds denominated by the Japanese yen but issued outside of Japan. They also differ from Shogun bonds, which are issued in Japan by foreign borrowers and denominated by a currency other than the Japanese yen.
It is also important to note the difference between Samurai bonds and sushi bonds. Sushi bonds are issued outside of Japan by Japanese borrowers, and are denominated by currencies other than the Japanese yen.
See also: Foreign bond
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