Issuers of Eurobonds include nations, regional governments and a large variety of companies. The bonds are denominated and valued using the euro currency. Though bonds as an investment class carry less risk than stocks, investors wishing to buy Eurobonds must carefully review the risk characteristics of a given bond or bond fund before making any purchases. Buyers living in nations that do not use the euro currency may also face risks from fluctuating exchange rate, though the changing rate could also have a positive impact on investments.
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Determine whether you wish to buy the bonds of an individual company or nation or a euro-focused bond fund, which will contain a large variety of either corporate or government bonds. The individual bonds may offer greater interest rates than a large fund, but the fund offers a diversified investment less likely to be greatly impacted by problems in one company or country. The fund will have professional management, which provides expertise but also higher costs.
Determine how much risk you are willing to assume. Bonds issued by countries, as well as most large companies, are evaluated and given ratings by major credit rating agencies. Those ratings should be available for any legitimate bond issue. Higher-rated Eurobonds will offer greater security and stability but in return will pay a lower interest rate. Riskier bonds can provide greater returns, but if the company or country has severe financial problems, a bondholder may lose his investment.
Review the bond or bond funds that most closely match your risk tolerances.
Select a licensed broker to purchase the bond fund or individual bond you have selected. Most large brokerages operating around the world will be able to make a purchase, as will many banks.
Complete your purchase, and confirm with the broker that the order was successfully placed. Obtain a receipt detailing the purchase price and number of shares of units purchased.
Tips and warnings
- Both individual bonds and bond funds often require a certain minimum investment. The threshold can vary widely by company, fund or bond issue.
- Bond investments are not guaranteed to return a profit or the initial investment. They carry risk of loss, so research bond choices carefully, speak with an investment professional and never invest more than you can afford to lose.
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