A Yankee bond is a US dollar denominated bond issued in the US by a foreign issuer.
The reasons for issuing a yankee bond are much the same as for other foreign currency bonds, but:
- The size of the US bond market makes it attractive to borrowers who wish to raise very large amounts. These include countries issuing sovereign debt.
- The size of the US economy and the common use of the dollar in international trade means that many companies have dollar income streams with which to pay dollar debt.
Issuing and trading bonds in the US makes the issuer subject to US regulation. Complying with this is very expensive. This is one reason for the issue of, and trading in, US dollar bonds off-shore.