Eurobonds are bonds denominated in various currencies, including U.S. dollars, and offered outside the issuer's country of origin for intended sale to the global community. Eurobonds typically pay interest annually, except in the case of emerging market bonds, which primarily pay semi-annually. In most cases, Eurobonds have no foreign withholding tax on either coupon or redemption payments. (Note: Foreign investing is subject to certain risks, such as currency fluctuation, plus social and political changes.)
In addition to domestic and international banks and corporations, Eurobonds are issued by supranationals, such as the World Bank and the Inter-American Development Bank, and by sovereigns, such as France, the United Kingdom, Sweden, Mexico, and Argentina. The rating agencies evaluate the credit risk of Eurobond issuers in exactly the same way they evaluate domestic issuers. One variable used in determining foreign issuers' creditworthiness is political risk. Domestic investors looking abroad should be aware that while their fundamentals might be comparable, foreign bond issues might have political sovereign concerns that will constrain their ratings.