What is a Matador Bond

A matador bond is a bond issued on a Spanish stock exchange by a foreign entity.


A matador bond describes any foreign bond issued in Spain. Before Spain adopted the euro as its currency, issuers denominated matador bonds in pesetas.

A foreign bond is a debt obligation issued in any domestic market by an entity domiciled in another country. Foreign bonds appeal to investors because their higher level of risk typically yields better returns than domestic bonds and because the bonds offer a chance to diversify their international holdings while dealing in local currency.

Matador bondssaw a boom between 1987 and 1999. They have historically been predominately corporate issues, and Spain followed a systematic approach when accepting new foreign issuers. Spain initially only allowed AAA-rated supranationals to issue matador bonds, then a few years later allowed other sub-AAA multinationals access to Spain's debt markets. Eventually, the country allowed non-investment grade bond issuances as well.

From 1999 through 2002, Spain transitioned to the euro, making matador bonds more or less indistinguishable from other foreign bonds denominated in euros and issued in other countries within the eurozone.

Foreign Bonds Similar to Matador Bonds

Similar foreign bonds exist in other markets. For example, the bulldog bond denominated in pounds sterling, kangaroo or Matilda bonds denominated in Australian dollars, Maple bonds denominated in Canadian dollars, and Samurai bonds denominated in Japanese yen.

Eurobonds Compared to European-Denominated Foreign Bonds

The adoption of the euro introduced a certain amount of confusion in terms due to the existence of a eurobond in markets before the arrival of the euro. A Eurobond describes any bond denominated in a currency not used in the market in which it gets issued. In other words, a Eurobond describes the opposite situation of a standard foreign bond. Depending on their currency of issue, a group of such bonds generally goes by a compound name with the prefix euro- followed by the currency of issue, for example eurodollar or euroyen bonds.

Because of this linguistic quirk, foreign bonds denominated in euros, such as those a foreign firm might issue in present-day Spain, do not qualify as eurobonds. A euro-denominated bond issue qualifies as a eurobond only if issued in a country that does not use the euro. A hypothetical bond issued in the United States but denominated in euros not only would qualify as a eurobond, but would belong to the subset of eurobonds known as the euroeuro.