Dual Currency Bond

Well, a currency duel would be way cooler.

Two bonds. One dusty road in the wild west. A saloon. A girl. And a gun.

Blam! Re-tired. Er…called. Er…paid. Whatever they call bonds when they're dead.

Anyway, a dual currency bond is a bond where the principal and the interest payments are made in different currencies. Like...you have a bond whose principal is paid off in U.S. dollars, but its interest is paid in euros. And yeah, whatever currency being used for interest payments is called the “base currency.”

Why would you, the investor…want one of these things?

Well, dual currency bonds are subject to exchange rate risk. In other words, you’re making a gamble not just on an investment, but on which way the exchange rate will…bounce. If the repayment currency appreciates, boom, you’re in the money. If not…well, there’s always bank robbery as a last resort…