Eurobond (external bond)

Eurobonds are named after the currency they are denominated in. For example, Euroyen and Eurodollar bonds are denominated in Japanese yen and American dollars, respectively. Eurobonds were originally in bearer bond form, payable to the bearer and were also free of withholding tax. The bank paid the holder of the coupon the interest payment due. Usually, no official records were kept. The word "eurobond" was originally created by Julius Strauss.

The first eurobonds were issued in 1963 by Italian motorway network Autostrade,[3] which issued 60,000 bearer bonds at a value of US$250 each for a fifteen-year loan of US$15m, paying an annual coupon of 5.5%. The issue was arranged by London bankers S. G. Warburg.[4][5] and listed on the Luxembourg Stock Exchange. Allen & Overy, one of London's Magic Circle of law firms, were the lawyers on the transaction. Their conception was largely a reaction against the imposition of the Interest Equalization Tax in the United States.[6] The goal of the tax was to reduce the US balance-of-payment deficit by reducing American demand for foreign securities. Americans could bypass the costly tax and Europeans could keep open access to US capital.

Like other commonly traded securities, virtually all Eurobonds now trade in dematerialized electronic book-entry form, rather than physical form.[7] The bonds are held and traded within one of the clearing systems (Euroclear and Clearstream being the most common).[8] Coupons are paid electronically via the clearing systems to the holder of the eurobond (or their nominee account).

• Bullough, Oliver. "The real Goldfinger: the London banker who broke the world". The Guardian.