A "Bulldog bond" is a term used in the world of finance to refer to a type of bond that is issued in the United Kingdom by a foreign entity, typically in a currency other than the British pound sterling. Bulldog bonds are named after the British Bulldog, a symbol of Britain, and are essentially bonds denominated in a foreign currency but issued in the UK market.
Here are some key features of Bulldog bonds:
Currency: Bulldog bonds are usually denominated in a currency other than the British pound. Common currency choices include the U.S. Dollar, EURO, or Japanese Yen.
Issuer: The issuer of Bulldog bonds is typically a non-British entity, such as a foreign government, international organization, or foreign corporation. These entities choose to tap into the UK capital market for funding by issuing bonds there.
Market Access: Issuing Bulldog bonds allows foreign entities to access the deep and liquid capital market in the United Kingdom. The bonds are subject to the regulatory framework and disclosure requirements of the UK market.
Investor Base: Bulldog bonds attract investors in the UK who may be seeking diversification by investing in bonds denominated in foreign currencies. This can be advantageous for both issuers and investors looking for exposure to different markets.
Fixed or Floating Rate: Bulldog bonds can be issued with either fixed or floating interest rates, depending on the terms set by the issuer.
It's important to note that while the term "Bulldog bond" specifically refers to bonds issued in the UK by non-British entities, similar terms are used for bonds issued in other markets. For example, Kangaroo bonds are Australian dollar-denominated bonds issued in Australia, and Samurai Bonds are yen-denominated bonds issued in Japan. These bonds provide issuers with the opportunity to tap into specific foreign markets and currencies.