foreign bond
Foreign Bond is a bond a company or government from one country sells in a different country, priced in that other country's currency.
In plain English
There is a particular joy in the old Balogun market when a trader from Cotonou comes to buy cloth, but pays in naira, following our rules, using our currency, because she wants access to what we are selling. That is roughly what a foreign bond does, except it happens between whole countries and companies, more than traders with bags of lace.
A foreign bond is when a company or government from Country A goes to Country B and issues a bond there, in Country B's currency, following Country B's rules. So if the Nigerian government wanted to borrow money from investors in Japan, and issued a bond in Tokyo, priced in yen, following Japanese regulations, that bond would be called a Samurai bond, which is simply Japan's pet name for a foreign bond issued on its soil.
The United Kingdom has its own version too. A foreign company that issues a bond in London, priced in pounds, is issuing what the British call a Bulldog bond. Same idea, different nickname, different flag on the passport.
Why would anyone bother? Because it opens the company or government to a fresh pool of investors who trust that particular country's market, and it can sometimes mean cheaper borrowing costs, if that country's interest rates are kinder than home.
For the Nigerian abroad sending money back, this matters less directly, but it shapes the bigger consider. When our government or a big Nigerian company borrows this way, it affects how much foreign currency flows into the country, which affects the naira's strength, which eventually affects how far that money transfer stretches when it lands.
A Nigerian telecom giant issues a bond in the United Kingdom, priced in pounds, following British listing rules, to raise £50,000,000 from British investors who already trust the London market. That bond, sitting calmly in London's books, is a foreign bond from the UK's point of view.
Questions people ask
Is a foreign bond the same as a Eurobond?
No, and this trips up many people. A Eurobond is issued outside the currency's home country and outside any single country's local rules, often in a mix of currencies and markets. A foreign bond is issued inside one specific foreign country, in that country's own currency, following that country's own regulations.
Why do foreign bonds have nicknames like Samurai or Bulldog?
It is simply market tradition. Each country gave its own foreign bond a nickname tied to its culture, Samurai for Japan, Bulldog for the United Kingdom, Yankee for the United States. The nicknames make it easier for traders to talk about them without saying the full description every time.
Can Nigeria issue a foreign bond?
Yes, in principle. If the Nigerian government issued a bond directly in, say, the United States market, priced in dollars, following American securities rules, that would be a foreign bond from America's perspective, sometimes called a Yankee bond.
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