## International Bonds and Depository Receipts

### Foreign Bonds vs Euro Bonds

Foreign Bonds: Issued in a domestic market by a foreign entity, denominated in the local currency
Euro Bonds: Issued outside the home country of the currency denomination

### Foreign Bond Types

Name	Issued In	Currency	Regulated By
Yankee Bond	USA	USD	SEC (US)
Samurai Bond	Japan	JPY (Yen)	Japanese authorities
Bulldog Bond	UK	GBP	UK authorities

Samurai Bond – Key Points:

Yen-denominated, issued in Tokyo
Issued by a non-Japanese company
Proceeds can fund Japanese operations or the company's local opportunities

Bulldog Bond – Key Points:

GBP-denominated, issued in London
Proceeds can fund UK operations or the company's local opportunities

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### Euro Bond Variants

Type	Key Feature
Euro Convertible Bonds	Debt + equity option; convertible at premium; may include call/put options
Euro Convertible Zero Bonds	No periodic interest; converts to equity on maturity
Euro Bonds with Warrants	Bond + detachable equity warrant; bonds often traded at discount
ESG-Linked Bonds	Issued for Environmental, Social, Governance projects

### ESG Bond Types

Type	Description	Example
Green Bonds	Eco-friendly/environmental projects	Ghaziabad Green Bond 2021
Social Bonds	Social causes: health, education, human rights	Vaccine Bonds
Sustainability Linked Bonds (SLBs)	Tied to measurable ESG performance goals (e.g., carbon reduction)	—

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### Euro Issues by Indian Companies

Indian companies raise foreign currency (FC) funds via:

1. ADRs – American Depository Receipts (US exchanges)

2. GDRs – Global Depository Receipts (European/London exchanges)

3. FCCBs – Foreign Currency Convertible Bonds

### ADR vs GDR

Basis	ADR	GDR
Issuing bank	U.S. bank	International bank
Market	USA	Europe/Asia (global)
Exchange	NYSE, NASDAQ	London, Luxembourg
Currency	USD	USD or EUR
Target investors	American	Global
Regulation	SEC	Foreign exchange regulations
Disclosure	US GAAP required	Less disclosure than ADR

### IDR (Indian Depository Receipt)

Foreign companies raise funds from Indian investors
Issued by the foreign company in India (opposite direction to ADR/GDR)

Worked example

### Example 1

A Japanese car company wants to raise USD-denominated funds in the US market. Which type of bond would it issue? → A Yankee Bond (denominated in USD, issued in the USA, regulated by SEC).

### Example 2

An Indian company, ABC Ltd., wants to list its shares on the London Stock Exchange for European investors. Which instrument should it use? → GDR (Global Depository Receipt) — traded on European exchanges with less disclosure than ADRs.

### Example 3

XYZ Corp (a British company) issues bonds in Tokyo denominated in Japanese Yen to fund its Japanese subsidiary's expansion. Identify the bond type. → Samurai Bond (Yen-denominated, issued in Tokyo, by a non-Japanese company).

### Example 4

A bond pays no periodic interest but converts to equity on maturity. Identify the type. → Euro Convertible Zero Bond.

### Example 5

Question: Who issues IDRs and who are the investors? → IDRs are issued by foreign companies; investors are Indian residents. This is the reverse of how ADRs/GDRs work for Indian companies.

⚠️ Common exam mistakes

Confusing ADR (US market, USD, SEC-regulated) with GDR (global/European market, USD or EUR, foreign exchange regulations) — ADR is a subset of GDR in scope.
Thinking Samurai bonds are issued BY Japanese companies — they are issued BY non-Japanese companies IN Japan, denominated in JPY.
Assuming IDR is issued by Indian companies — IDRs are issued by FOREIGN companies to raise funds FROM Indian investors.
Mixing up Euro Convertible Zero Bonds (no interest, equity on maturity) with regular Euro Convertible Bonds (interest paid, equity option at premium, may have call/put).
Forgetting that Bulldog bonds are GBP-denominated (not EUR), issued in London by non-UK entities.

Reference:

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International Bonds, Euro Bonds, ADR/GDR/IDR

Worked example

⚠️ Common exam mistakes