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.

RELATED TERMS
  1. Global Bond

    This type of bond can be traded in a domestic or European market. ...
  2. Sovereign Bond

    A debt security issued by a national government within a given ...
  3. Foreign Bond

    A bond that is issued in a domestic market by a foreign entity, ...
  4. Dollar Bond

    1. A U.S. denominated bond that trades outside of the United ...
  5. Baby Bond

    Fixed income securities issued in small denominations, generally ...
  6. Denomination

    A classification for the stated or face value of financial instruments, ...
Related Articles
  1. Investing

    How Exchange Risk Affects Foreign Bonds

    Investors include foreign bonds in their portfolios to take advantage of higher interest rates or yields, and to diversify their holdings. However, the higher return expected from investing in ...
  2. Investing

    Spice Up Your Portfolio With International Bonds

    Going global can add flavor and diversity to an otherwise bland basket of bonds.
  3. Investing

    Mechanical Investing Not A Golden Key

    Direct paths to wealth are getting narrower, fewer and may be locked up tight.
  4. Investing

    Corporate Bond Basics: Learn to Invest

    Understand the basics of corporate bonds to increase your chances of positive returns.
  5. Investing

    How To Choose The Right Bond For You

    Bond investing is a stable and low-risk way to diversify a portfolio. However, knowing which types of bonds are right for you is not always easy.
  6. Investing

    Basics Of Federal Bond Issues

    Treasuries are considered the safest investments, but they should still be analyzed when issued.
  7. Investing

    A Focus on Chinese Tourists is Shaking Things Up (LVS, MGM)

    The Chinese consumer will play a big role, and the mainstays might lose this battle.
  8. Insights

    Dragons, Samurai Warriors And Sushi On Wall Street

    From samurai to sushi, there's no denying the East Asian influence on investing terminology.
  9. Investing

    Investing in Bonds: 5 Mistakes to Avoid in Today's Market

    Investors need to understand the five mistakes involving interest rate risk, credit risk, complex bonds, markups and inflation to avoid in the bond market.
RELATED FAQS
  1. Which factors most influence fixed income securities?

    Learn about the main factors that impact the price of fixed income securities, and understand the various types of risk associated ... Read Answer >>
Hot Definitions
  1. Operating Cost

    Expenses associated with the maintenance and administration of a business on a day-to-day basis.
  2. Money Market

    A segment of the financial market in which financial instruments with high liquidity and very short maturities are traded. ...
  3. Block (Bitcoin Block)

    Blocks are files where data pertaining to the Bitcoin network is permanently recorded.
  4. Fintech

    Fintech is a portmanteau of financial technology that describes an emerging financial services sector in the 21st century.
  5. Ex-Dividend

    A classification of trading shares when a declared dividend belongs to the seller rather than the buyer. A stock will be ...
  6. Debt Security

    Any debt instrument that can be bought or sold between two parties and has basic terms defined, such as notional amount (amount ...
Trading Center