BROWSE

Yankee Bond

Definition

A Yankee Bond is a bond issued by a foreign entity, such as a bank or company, but is issued and traded in the United States and denominated in U.S. dollars. For instance, Company ABC is headquartered in France. If Company ABC issues bonds in the United States that are denominated in U.S. dollars, the bonds are Yankee bonds. Yankee bonds are normally issued in tranches, a large debt structure financing arrangement into a lot of portion, each portions have different level of risk, interest rates and maturities, and the value of investment grouping might be extremely high, as much as $1 billion. U.S. investors buy Yankee bonds to branch out into overseas markets. Yankee bonds are same with other bonds which will require the borrower to pay a certain interest rate and principal amount according to the terms of the indenture. Yankee Bonds are administered by the Securities Act of 1933. A non-American company will sell bonds in United States to raise capital from American investors.

What is a 'Yankee Bond'

A Yankee bond is a bond issued by a foreign entity, such as a bank or company, but is issued and traded in the United States and denominated in U.S. dollars. Yankee bonds are governed by the Securities Act of 1933, which requires the bonds to be registered with the Securities and Exchange Commission (SEC) prior to being offered for sale. Yankee bonds are frequently issued in tranches, individual portions of a larger debt offering or structured financing arrangement that have differing risk levels, interest rates and maturities, and offerings may be extremely large, as much as $1 billion. Next Up Yankee CD Yankee Market Bond Yankee Certificate Of Deposit

Explaining 'Yankee Bond'

One of the drawbacks of Yankee bonds for issuers is the time involved in offering a bond for sale. Because of strict U.S. regulations for the issuing of such bonds, it can take more than three months for A Yankee bond issue to be approved for sale. The approval process includes an evaluation of the issuer’s credit worthiness by a debt-rating agency such as Moody’s or Standard & Poor’s. Foreign issuers usually favor issuing Yankee bonds when there is a low interest rate environment in the United States, since that means the issuer is able to offer the bond with lower interest payments.

Advantages of Yankee bonds for Issuers and Investors

Yankee bonds can represent a win-win opportunity for both issuers and investors. One of the primary potential advantages for A Yankee bond issuer is the opportunity to obtain financing capital at a lower cost if comparable bond rates in the United States are significantly lower than the current rates in a foreign company’s own country. The size of the U.S. bond market and the fact it is very actively traded by U.S. investors also confers an advantage for the issuer, especially if the bond offering is a large one. Although U.S. regulatory requirements may initially hamper a foreign issuer in regard to obtaining approval to offer bonds, conditions for lending in the United States may still be less stringent overall than those in the issuer’s own country, allowing the issuer greater flexibility in the terms of the offering.


Further Reading


The costs, wealth effects, and determinants of international capital raising: Evidence from public Yankee bonds
www.sciencedirect.com [PDF]
… Journal of Economic Literature Classification Numbers: F3, G1. C 2002 Elsevier Science (USA) Key Words: Yankee bonds; international capital raising … Page 11. PUBLIC YANKEE BONDS 465 bond issues from 16 countries …

Modelling the Credit Spreads and Long–Term Relationships of Thai Yankee Bond IssuesModelling the Credit Spreads and Long–Term Relationships of Thai Yankee Bond Issues
onlinelibrary.wiley.com [PDF]
… Journal of Economic Literature Classification Numbers: F3, G1. C 2002 Elsevier Science (USA) Key Words: Yankee bonds; international capital raising … Page 11. PUBLIC YANKEE BONDS 465 bond issues from 16 countries …

US power and the international bond market: financial flows and the construction of risk valueUS power and the international bond market: financial flows and the construction of risk value
link.springer.com [PDF]
… Journal of Economic Literature Classification Numbers: F3, G1. C 2002 Elsevier Science (USA) Key Words: Yankee bonds; international capital raising … Page 11. PUBLIC YANKEE BONDS 465 bond issues from 16 countries …

The Disclosure Cost of SEC Registration and Market Unraveling: Evidence from Rule 144A and Yankee Bond IssuesThe Disclosure Cost of SEC Registration and Market Unraveling: Evidence from Rule 144A and Yankee Bond Issues
oaktrust.library.tamu.edu [PDF]
… Journal of Economic Literature Classification Numbers: F3, G1. C 2002 Elsevier Science (USA) Key Words: Yankee bonds; international capital raising … Page 11. PUBLIC YANKEE BONDS 465 bond issues from 16 countries …

Does Mandatory Risk Information Disclosure Affect Bank Debt Design? Cross-Country Evidence from Yankee Bond CovenantsDoes Mandatory Risk Information Disclosure Affect Bank Debt Design? Cross-Country Evidence from Yankee Bond Covenants
papers.ssrn.com [PDF]
… Journal of Economic Literature Classification Numbers: F3, G1. C 2002 Elsevier Science (USA) Key Words: Yankee bonds; international capital raising … Page 11. PUBLIC YANKEE BONDS 465 bond issues from 16 countries …

The Costs, Wealth Effects, and Determinants of International Capital Raising: Evidence from Public Yankee BondsThe Costs, Wealth Effects, and Determinants of International Capital Raising: Evidence from Public Yankee Bonds
elibrary.ru [PDF]
… Journal of Economic Literature Classification Numbers: F3, G1. C 2002 Elsevier Science (USA) Key Words: Yankee bonds; international capital raising … Page 11. PUBLIC YANKEE BONDS 465 bond issues from 16 countries …

Control/ownership structure, creditor rights protection, and the cost of debt financing: International evidenceControl/ownership structure, creditor rights protection, and the cost of debt financing: International evidence
www.sciencedirect.com [PDF]
… Journal of Economic Literature Classification Numbers: F3, G1. C 2002 Elsevier Science (USA) Key Words: Yankee bonds; international capital raising … Page 11. PUBLIC YANKEE BONDS 465 bond issues from 16 countries …

Does social trust affect international contracting? Evidence from foreign bond covenantsDoes social trust affect international contracting? Evidence from foreign bond covenants
link.springer.com [PDF]
… Journal of Economic Literature Classification Numbers: F3, G1. C 2002 Elsevier Science (USA) Key Words: Yankee bonds; international capital raising … Page 11. PUBLIC YANKEE BONDS 465 bond issues from 16 countries …


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