What is Yankee Bond?
Bank or corporation issues bonds to raise funds from investors buying bonds. The bank or corporation then repays investors of interest at the maturity of the bonds. The Yankee bond is denominated in US dollars (USD) and is publicly issued in the United States, but the issuer is a foreign bank or corporation. The issuer often sells these bonds in transit, each of which is worth up to $ 1 billion. Amazing Yankee regulations and standards, so on yankee bonds, can occupy strict regulations and standards of Yankee. The 1933 securities Act requires that these bonds be registered with the Securities and Stock Exchange Commission (SEC). Debt evaluation agencies must also evaluate the loan value of the issuer. The complexity and cost of issuing Yankee bonds in the US forces some banks and corporations to trade USD elsewhere.
Despite these regulations, some foreign issuers decide to sell USD bonds in the US for the size of the US market, which atIt requires issuers to borrow larger amounts of USD than it is possible in their home countries. The release of Yankee bonds allows the issuer to obtain enough USD, currencies commonly used in international trade. The issue of bonds in the US also protects the issuer from fluctuations in exchange of currencies. Other potential disadvantages that may avoid issuing Yankee bonds include the need to pay foreign taxes and must comply with more complex regulations and standards in their home countries. Banks and corporations often issued by Yankee bonds come from Canada, Great Britain and Germany.
u.s. Investors buy Yankee bonds to diversify their portfolio. Yankee bonds allow them to participate in the foreign market without having to exchange their USD to other currencies. This limits the risks that arise from the exchange of exchange courses.
Issuance on the Yankee bond market depends on interest rates in the US, USD strength, and the financial situation of the issuer. Yankee's bond issuers prefer to sell bondsYankee, if US interest rates are low to take advantage of lower interest payments, leading to cheaper costs to increase USD capital. They also prefer to issue these bonds when it is strong, so they receive USD at a time when it has great purchasing power.
Some types of bonds have similar properties to Yankee binding. For example, a bulldog bond is denominated in the UK (GBP) and trades in the UK, but is issued by the non -Britian bank or corporation. The samurai bond is denominated in Japanese Jenu (JPY) and traded in Japan, but issued by a non -Bank or company.