Bulldog Bond

Bulldog bond is a type of foreign bond issued in the domestic UK market by a foreign entity in pounds sterling (GBP). The name comes from the breed "Bulldog", which has been considered a symbol of Great Britain since time immemorial.

The concept of bulldog bonds is quite similar to other types of foreign bonds such as: Kangaroo Bond, Yankee Bond, Panda Bond, Samurai Bond, but they have differences in:

1) features of state regulation;

2) market territory.

The main characteristics of a bulldog bond are as follows:

1. The Issuer is not a resident of the UK and its controlled territories.

2. Issue currency is always pounds sterling (GBP).

3. The organizer of such issues are banks or a group of banks registered in the UK.

4. They can be freely purchased by non-residents of the countries where the placement takes place.

Advantages, as well as disadvantages, are more expedient for the investor and the issuer.

Benefits for the investor:

1. High liquidity.

2. Leveling of currency risks (if the investor is from abroad).

3. Stability and high level of development of the UK securities market.

4. Higher yield compared to domestic corporate bonds.

Disadvantages for the investor:

1. Higher risks of securities depreciation.

2. Formal restrictions on the purchase and sale (nominal value, increased requirements for the investor).

Benefits for the issuer:

1. High liquidity.

2. Leveling the currency risks of the issuing country.

3. Increased demand for the tool.

Disadvantages for the issuer:

1. Higher payouts to investors compared to domestic debt securities in the home market.

2. Increased risk of default if the issuer’s currency is volatile.

3. Fewer chances of possible organizers of placements.

4. Longer issuance procedure, as well as less flexible placement options.

Examples:

Bank of Ireland, 13.375% perp., GBP

Morgan Stanley B.V., 0% 10aug2027, GBP