Bulldog Bond

What is Bulldog Bond?

A bulldog bond is a type of foreign bond issued by non-British corporations seeking to bring capital up in pound-sterling (GBP) from British investors.

Understanding Bulldog Bond

A company might decide to enter a foreign market assuming that it accepts that it would get alluring interest rates in this market or on the other hand assuming it has need for the foreign currency. At the point when a company chooses to tap into a foreign market, it can do as such by giving foreign bonds, which are bonds named in the currency of the planned market. Basically, a foreign bond is a bond issued in a domestic market by a foreign entity in the domestic market's currency for of raising capital. Foreign bonds are basically used to give issuers with access to one more capital market outside of their own to raise funds.

A bulldog bond is a type of foreign bond issued by non-British corporations seeking to bring capital up in pound-sterling from British investors. For instance, a Canadian company hoping to access investment capital in the U.K. bond market may opt to issue a bulldog bond. If the connected expenses (debt) are additionally in British pounds, and the revenue can offset them, then, at that point, the exchange rate risk is diminished.

These pound designated bonds are alluded to as bulldog bonds given that the British bulldog is a national icon of England. As per the Bank for International Settlements, GBP is positioned fourth around the world in both the most traded currency and reserve currency categories after the U.S. Dollar (USD), Euro (EUR), and the Japanese Yen (JPY).

Bulldog Bond Characteristics

• The bulldog bond is guaranteed by a single bank or a syndicate of domestic banks and is named in British pounds.
• A bulldog bond is issued when the interest rates in the U.K. are low relative to the foreign organization's domestic interest rates. Giving a bulldog bond lowers the issuer's interest expense or cost of borrowing.
• U.S. investors seeking to expand their portfolios geologically can purchase this bond, however thusly they take on foreign exchange risk, that is, the risk of an adverse change in value of the sterling according to the dollar. In any case, a positive movement in the exchange could achieve financial gains to the investor.
• A bulldog bond is like the yankee bond, designated in USD, in that a non-American company can sell these bonds in the United Sates to bring capital up in U.S. Dollars.
• Other foreign bonds incorporate kangaroo bonds, maple bonds, bullfighter bonds, samurai bonds, and rembrandt bonds.

Features

• These foreign, pound named, bonds are alluded to as bulldog bonds given that the British bulldog is a national icon of England.
• Bulldog bond is a bond, traded in the United Kingdom, that is purchased by purchasers interested in earning a revenue stream from the British pound.
• A bulldog bond is a type of foreign bond issued by non-British corporations seeking to bring capital up in pound-sterling from British investors.