DEFINITION of Bulldog Bond

Bulldog bond is a type of bond purchased by buyers interested in earning a revenue stream from the British pound or sterling. A bulldog bond is traded in the United Kingdom. If the revenue is used to reduce debt that is also in British pounds, the exchange rate risk is decreased.


A company may choose to enter a foreign market if it believes that it would get attractive interest rates in this market or if it has need for the foreign currency. When a company decides to tap into a foreign market, it can do so by issuing foreign bonds, which are bonds denominated in the currency of the intended market. Simply put, a foreign bond is issued in a domestic market by a foreign issuer in the currency of the domestic country. Foreign bonds are mainly used to provide issuers with access to another capital market outside of their own to raise capital.

A bulldog bond is a type of foreign bond issued by non-British corporations seeking to raise capital in pound sterling (GBP) from British investors. For example, a Canadian company looking to access investment capital in the U.K.’s debt market may opt to issue a bulldog bond. These sterling bonds are referred to as bulldog bonds given that the British bulldog is a national icon of England. As of 2018, the sterling is considered the fourth most traded currency and the third largest reserve currency in the world after the U.S. dollar and the euro.

The bulldog bond is underwritten by a single bank or a syndicate of domestic banks and is denominated in British pounds. A bulldog bond is issued when the interest rates in the U.K. are low relative to the foreign corporation's domestic interest rates. Issuing a bulldog bond lowers the issuer’s interest expense or cost of borrowing. U.S. investors seeking to diversify their portfolios geographically can purchase this bond, but by doing so they take on foreign exchange risk, that is, the risk of an adverse change in value of the sterling in relation to the dollar. However, a favorable movement in the exchange could bring about financial gains to the investor.

This bond is similar to the Yankee bond in that a non-American company can sell these bonds in the United Sates in order to raise capital in US dollars. The Yankee bond is denominated in U.S. dollars. Other foreign bonds include Kangaroo bonds, Maple bonds, Matador bonds, Samurai bonds, and Rembrandt bonds.