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Eurobonds: international bonds sold offshore since 1963
First: Autostrade, July 1963· Asset or instrument
Fact, law or dataA rule, statute, definition or measured number.
Bonds sold to investors in many countries, outside the home market of the bond's currency, arranged mostly in London since 1963.
See it on the Money & Finance map →How it works
The first, in July 1963, was a $15 million, 15-year bond for Italy's Autostrade highway company, led by London's S.G. Warburg. That month President Kennedy proposed the Interest Equalization Tax, making it costly for foreigners to borrow in New York, so dollar borrowing moved offshore. Eurobonds were usually bearer bonds, free of withholding tax, outside any one national regulator, and settled through Euroclear (1968) and Cedel, now Clearstream. 'Euro' meant offshore, not the euro currency. Today they are called international bonds.
Why it matters
They built a global, lightly regulated bond market where companies and governments borrow from investors worldwide, and helped make London the center of international finance. US investors reach them through international bond funds.
Facts, rules and data
The Autostrade offering documents, Niall Ferguson's biography of Siegmund Warburg (2010), BIS international debt-securities statistics, and the 1964 Interest Equalization Tax Act.
Debates and risks
'Eurobonds' now also means jointly backed EU bonds, a separate idea; the EU began large-scale joint borrowing in 2020, and whether to make that permanent is debated.
Connections (2)
▸Eurobonds: international bonds sold offshore since 1963 grew out of Eurodollars: the offshore dollar banking systemFact, law or data
The connection
By the early 1960s, London banks held large pools of offshore dollar deposits outside US rules. Eurobonds gave those dollars a long-term home: borrowers sold dollar bonds in London to investors holding eurodollars, avoiding US taxes, disclosure rules and the 1963 Interest Equalization Tax. The bond market grew as the long-term arm of the offshore dollar system.
When and why
London, from 1963; the Autostrade issue came first, and the market boomed after US capital controls of 1965–68.
How we know
Histories by Catherine Schenk and Barry Eichengreen, BIS data, and contemporary Bank of England reports on the London dollar market.
Debates and risks
Whether Eurobonds would have grown anyway, or mainly because of US taxes and controls that were lifted in 1974, is debated by historians.
▸Eurobonds: international bonds sold offshore since 1963 were pioneered by London Investment banks: underwriting, deals and tradingFact, law or data
The connection
Investment banks arrange bond deals: they set terms, buy the bonds from the issuer and resell them to investors. London merchant banks, led by Siegmund Warburg's S.G. Warburg, built selling groups across Europe for Eurobonds; by the 1970s, US and Swiss firms such as Credit Suisse First Boston dominated the business.
When and why
London, from 1963 through the 1980s; Credit Suisse First Boston often topped the underwriting league tables in the 1970s and 1980s.
How we know
Deal prospectuses and 'tombstone' advertisements listing underwriters, industry league tables, and biographies of Siegmund Warburg.
Debates and risks
Whether the Eurobond market's light regulation encouraged later excesses in offshore finance, or mainly lowered borrowing costs, is debated.