BULLDOG BOND

Today's word: BULLDOG BOND
Theme for this fortnight: BONDS

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 also in British pounds, the exchange rate risk is decreased. These bonds are issued by non-British institutions that want to sell the bond in the United Kingdom. U.S. investors can also purchase this bond, but by doing so they take on the risk of the change in value of the sterling.

These sterling bonds are referred to as bulldog bonds as the bulldog is a national symbol of England. The sterling is considered the third largest reserve currency in the world after the U.S. dollar and the euro. 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. The Yankee bond is denominated in U.S. dollars.