what is an international bond 
an international bond is an investment in debt that is issued by a foreign entity for example a u s based international bond fund might invest in australian government bonds chinese corporate bonds and other government and corporate bonds issued in foreign countries as with any bond international bonds pay interest at specified intervals and repay the principal amount back to bondholders at the maturity date many mutual funds in the united states hold these bonds some investors buy international bonds in order to diversify their portfolios and add some exposure to foreign investments understanding international bondsas business becomes more globalized companies discover ways to access cheaper sources of financing outside of their country of operations instead of relying on investors in domestic markets businesses and governments can tap into the pockets of global investors for much needed capital one way companies can access the international lending scene is by issuing international bonds most international bonds are issued within the nation s borders and in its local currency from the perspective of an investor residing in the united states an international bond is one that is issued by a corporation or government in any country that uses a currency other than the u s dollar types of international bondsthere are several broad categories of international bonds that are of greatest interest to investors in the u s they include eurobonds global bonds and brady bonds eurobonds are issued in a currency other than the native currency of the corporation or other issuer for example a company that is based in switzerland that plans to build a manufacturing plant in mexico might issue a bond that is denominated in pesos the company is getting direct access to the mexican pesos it will need for the project probably at a lower cost than borrowing from a mexican bank mexican investors are getting an investment that does not involve the currency risk of exchanging swiss francs for pesos it can get more complicated for example a french company might issue a bond in japan that is denominated in u s dollars rather than euros this also is a eurobond or more specifically a eurodollar bond other common types of eurobonds are euroyen bonds issued in japanese yen and euroswiss bonds issued in swiss francs global bonds are similar to eurobonds but they can also be traded and issued in the country whose currency is used to value the bond for example a global bond could be issued by a french company denominated in u s dollars and offered to investors in both japan and america brady bonds are sovereign debt securities denominated in u s dollars and backed by u s treasury bonds but they are issued by other nations classified by the federal reserve as a type of emerging markets bond they were created by the u s to help developing nations with burdensome foreign debts 1part of a program developed in 1989 and named after then treasury secretary nicholas brady the bonds are meant to help emerging nations restructure their debts and reach financial stability most brady bonds are rated below investment grade 1international bonds vs foreign bondsalthough the terms are sometimes used interchangeably international bonds and foreign bonds are not the same foreign bonds are issued in one market and denominated in its currency but issued by a foreign company for example a u s company that does business in canada might issue a bond in canada that is valued in canadian dollars often foreign bonds bear cute names that reflect the local currency or country in which they re issued the bond in the example above would be referred to as a maple bond other types of foreign bonds include special considerations