What defines Yankee bonds?

Yankee bonds are defined as bonds that are issued in the United States by foreign entities and are denominated in US dollars. This specific characteristic distinguishes them from other types of foreign bonds, as it allows non-US companies to tap into the US capital markets to raise funds while still benefiting from the liquidity and stability associated with US dollar-denominated securities. This type of bond serves as an essential bridge for foreign issuers looking to reach American investors.

The nature of Yankee bonds makes them particularly attractive to both issuers and investors, as they allow foreign issuers to take advantage of the strong US investor base while providing domestic investors with opportunities to invest in international entities without currency risk related to foreign currencies.

Other types of bonds, such as those issued by US entities or denominated in foreign currencies, do not fit the specific criteria characterizing Yankee bonds. Similarly, bonds issued by state governments pertain to municipal finance and are not related to foreign issuers or currency denominations.