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. Dollar Bond

    1. A U.S. denominated bond that trades outside of the United ...
  4. Foreign Bond

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

    Corporate Bond Basics: Learn to Invest

    Understand the basics of corporate bonds to increase your chances of positive returns.
  3. 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.
  4. Investing

    Mechanical Investing Not A Golden Key

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

    Basics Of Federal Bond Issues

    Treasuries are considered the safest investments, but they should still be analyzed when issued.
  6. 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.
  7. Investing

    Nuance to Bring Beefier Transcription to iPhone, Android

    For years, Nuance Communications (NASDAQ: NUAN) has subsisted on sales of new versions of software. The faster the upgrade cycle, the more revenue growth the company would enjoy. Those days ...
  8. Investing

    The Top 5 International Bond ETFs for 2016 (BNDX, VWOB)

    Learn more about five of the top international bond ETFs designed to provide exposure to foreign government and corporate debt securities.
  9. Investing

    The Basics Of Bonds

    Bonds play an important part in your portfolio as you age; learning about them makes good financial sense.
  10. Investing

    Surprise! The Best Long-term Bond Investment May Be Savings Bonds

    A 20-year Series EE savings bond pays more interest than a 20-year Treasury bond. So are government-issued long-term bonds the best bet going?
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 >>
  2. What are the key factors that will cause a bond to trade as a premium bond?

    Learn about the primary factor that can cause bonds to trade at a premium, including how national interest rates affect bond ... Read Answer >>
  3. Can Mutual Funds Only Hold Bonds?

    Find out which mutual funds include only bonds in their portfolios. Learn why some funds invest in different types of bonds ... Read Answer >>
Hot Definitions
  1. North American Free Trade Agreement - NAFTA

    A regulation implemented on Jan. 1, 1994, that decreased and eventually eliminated tariffs to encourage economic activity ...
  2. Benchmark

    A standard against which the performance of a security, mutual fund or investment manager can be measured.
  3. Mobile Wallet

    Mobile wallet is a virtual wallet that stores payment card information on a mobile device.
  4. Leverage

    1. The use of various financial instruments or borrowed capital, such as margin, to increase the potential return of an investment. ...
  5. Trumponomics

    Trumponomics is a term for the economic policies of President Donald Trump.
  6. Universal Health Care Coverage

    An organized healthcare system that provides healthcare benefits to all persons in a specified region. Many countries, such ...
Trading Center