Foreign Bonds (Sovereign, Corporate, Yankee)
Debt issued by foreign governments and companies.
What is Foreign Bonds (Sovereign, Corporate, Yankee)?
Foreign sovereign and corporate bonds add currency risk (if not in dollars) and political or geopolitical risk to the usual credit and rate risks. Yankee bonds are dollar-denominated bonds issued in the US by foreign issuers and registered with the SEC, eliminating currency risk for US investors. Eurodollar bonds are dollar-denominated but issued outside the United States.
Foreign Bonds (Sovereign, Corporate, Yankee): a worked example
A Canadian bank selling dollar-denominated bonds in New York is issuing Yankee bonds.
More terms in Bonds & Cash Equivalents
Certificate of Deposit (CD)
A bank time deposit paying a fixed rate for a fixed term, FDIC insured.
Commercial Paper
Unsecured short-term corporate debt, 270 days or less.
Treasury Inflation-Protected Securities (TIPS)
Treasuries whose principal adjusts with the CPI.
Zero-Coupon Bond
Sold at a deep discount, pays no interest, matures at par.
Asset-Backed Securities (ABS / MBS)
Bonds backed by pools of loans - mortgages, auto loans, credit cards.
General Obligation (GO) Bond
A municipal bond backed by the issuer's full faith, credit, and taxing power.
Revenue Bond
A municipal bond repaid only from the revenue of a specific project.
Insured Municipal Bond
A muni with third-party insurance guaranteeing principal and interest.