Dual Currency Bond
Bond denominated in one currency, but paying interest in another currency at a fixed exchange rate.
Definition: Dual currency bonds are denominated in one currency, but pay interest in another currency at a fixed rate of exchange. Dual currency bonds can also pay redemption proceeds in a different currency froDefinition: m the currency of denomination.
A eurobond that pays interest (makes coupon payments) in one currency but pays the principal in a different currency.
There are three methods used in applying the exchange rate to principal and interest payments from dual-currency bonds: 1. Use of the prevailing exchange rate at the bond's issuance. 2. Use of the existing exchange rate (spot rate) at the time cash flow payments are made. 3. The use of the currency that is chosen from the two currencies by the investors or issuers of these bonds. Also known as an option currency bond.
Definition: Dual currency bonds are denominated in one currency, but pay interest in another currency at a fixed rate of exchange. Dual currency bonds can also pay redemption proceeds in a different currency froDefinition: m the currency of denomination.
A eurobond that pays interest (makes coupon payments) in one currency but pays the principal in a different currency.
There are three methods used in applying the exchange rate to principal and interest payments from dual-currency bonds: 1. Use of the prevailing exchange rate at the bond's issuance. 2. Use of the existing exchange rate (spot rate) at the time cash flow payments are made. 3. The use of the currency that is chosen from the two currencies by the investors or issuers of these bonds. Also known as an option currency bond.
posted by Pankaj Ratna at 1:09 PM
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