Samurai bonds are yen-denominated bonds issued in Tokyo by non-Japanese businesses that must abide by Japanese laws.
Euro-yens are another name for yen-denominated bonds that are issued in nations other than Japan, typically in London. Foreign corporations issue yen-denominated samurai bonds in Japan that are governed by Japanese law.
Companies might issue yen-denominated bonds to benefit from the low interest rates in Japan or to obtain access to Japanese markets and investors.
Cross-currency swaps and currency forwards can frequently be used to reduce the risks of raising capital in Japanese yen.
Like Samurai bonds, Shogun bonds are issued in Japan by foreign companies, but unlike Samurai bonds, they are not pegged to the yen.
A business may decide to join a foreign market if it thinks it can obtain favorable interest rates there or if it needs foreign money. When a business decides to enter a foreign market, it can do so by issuing foreign bonds, or bonds with a value in the target market’s currency.
Simply, a foreign issuer issues a foreign bond in the domestic market using the local currency. The fundamental purpose of foreign bonds is to give corporate or sovereign issuers access to a capital market outside of their home market in order to raise money.
