Question

Suppose that Toyota sells yen-denominated bonds in Tokyo. Is this debt instrument considered a Eurobond? How would your answer change if the bond were sold in New York?

Short answer

No, it would not be considered Eurobond if sold in Tokyo. If sold in New York, it would be considered Eurobond.

Step-by-step solution

Step 1. Introduction

Bonds are debt instruments that are issued by governments and businesses to raise funds. The investor earns interest rate upon the maturity of bond. In the international bond market, there are different types of bonds such as Foreign bonds, Euro bonds, etc.

Step 2. Explanation 

A Eurobond is a new type of bond in the international financial market. It is the type of bond which is denominated in a currency different from the currency of the country in which it is sold. For instance, if a bond denominated in British pounds is sold in the US, then it classifies as a Eurobond.

Here, bond denominated in Yen is being sold in Japan, the Japanese currency is also Yen, so this bond would not qualify as a Eurobond.

If the same bond is sold in the US market such as in New York, then it would be considered a Europound, because the US currency is not Yen.