Bonds are the way that governments, companies, and other organizations sell their debt. Bonds are essentially loans that are sought from investors to finance the bond issuer's debt. There are four basic types of bonds:

- U.S. government (and its agencies)

- Corporate

- State and local government

- Foreign government

A Eurobond is a foreign bond that can be issued by either a foreign sovereign government or company. Despite its name, Eurobonds are not just for Europeans. A Eurobond is a bond issued and traded in a country other than the one in which its currency is denominated. For example, a U.S. company could issue a Eurobond in any country that does not use the U.S. dollar as its currency, whether the country is Japan or France. However, most Eurobonds are issued by non-European companies or governments to be traded by European investors.

Eurobonds make up the majority of new issues in the international bond market. The international bond market is now larger than the U.S. bond market. Like regular bonds, Eurobonds have a maturation date in which an investor can cash in the bonds. Interest is usually paid annually and the principal is paid upon maturation of the bond.

Investing in Eurobonds, like all other investments, comes with certain risks. Since it is considered international investing, the lack of information on economic and political conditions in other countries raises that risk even higher. In addition, since the value of Eurobonds is based upon foreign currency rates as compared to the U.S. dollar, there is a good chance that the value of the Eurobond will be higher or lower at the maturation date. This is due to the volatility in foreign currency trading.

For additional information on Eurobonds, visit the Eurobonds.info Web site.