“Study on US bonds versus Eurobonds. Analysis of indexes and comparison of the two different zone bonds”
Sotiria Nezi
Finance 362-31 Investments
Professor L. Syed
April 2007
In today’s international financial markets there is an array of different securities that are traded. The main distinction can be made with debt and equity securities. This analysis is going to focus on debt securities and specifically on Euro treasuries and US treasuries. A brief history of the establishment and growth of the securities followed by an explanation on the use of indexes in the bond rating process are going to precede the actual analysis of rate fluctuation and price volatility in order to put the reader into perspective. A note needs to be made as to the distinction of the different treasuries. The focus will be mostly on short-term securities thus the terms US bonds and Eurobonds will be used. Nowadays most of the treasury names are interchangeable and even though in the US there is an effort to distinguish in between notes, bills, and bonds that does not apply in Europe as well. The terms are used regardless of the maturity of the security1.
The history of US bonds dates several centuries back. During the Civil War the National Banking act of 1863 was passed, providing for nationally chartered banks, whose circulating notes had to be backed by US government securities. An amendment to the act required taxation on the state bank notes but not national bank notes, effectively creating a uniform currency for the nation. That was considered the first heavy volume circulation of treasury securities. Almost a century after, in reaction to the Great Depression, Congress ...