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Yankee Bond

Candlefocus Editor
A Yankee bond is a form of publicly issued debt denominated in U.S. dollars, meaning that the principal and interest payments are made in U.S. dollars. Yankee bonds can be publicly issued by foreign governments, corporations and banks, as well as other entities located outside of the United States. They are issued in the U.S. and are subject to U.S. securities laws, meaning that they must be issued by reputable entities whose bonds trade on U. S.—based exchanges like the New York Stock Exchange.

Issuing Yankee bonds offers many benefits to the issuer, including cheaper financing costs and the ability to reach a larger and deeper investment audience. These bonds also tend to have higher yields than bonds issued in the issuer's home country. For investors, Yankee bonds offer the chance for higher returns as well as an opportunity for diversification.

On the other hand, Yankee bonds can be subject to longer lead-times before they come to market, making them more vulnerable to interest rate risk in a changing market. In addition, they can be affected by currency risk, if the bond is denominated in the issuer's home currency. They are also vulnerable to other political or economic conditions in the issuer's home country.

Overall, Yankee bonds offer a great opportunity for both issuers and investors. However, these bonds must be handled with caution and carefully evaluated in order to determine the level of risk associated with them.

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