DEFINITION of 'Dragon Bond'

A fixed income security issued by a firm in an Asian nation, other than Japan, which is denominated in a foreign currency, usually U.S. dollars. The purpose of a dragon bond is to attract funds from a larger market of foreign investors. A secondary reason for issuing dragon bonds is so the bond is denominated in a more stable currency.

BREAKING DOWN 'Dragon Bond'

Bonds denominated in foreign currencies are aimed at specific markets where investors are usually willing to lend money on more favorable terms than may be available to them domestically. Because of their international nature, dragon bonds can be complicated instruments when considering international taxation and regulatory compliance issues.

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