Which statement about eurobonds is true?

Which statement about eurobonds is true?

• A. They usually do not provide collateral but are rated by bond-rating agencies.
• B. They are not rated by agencies since they are for large issuers only.
• C. They are always secured by government guarantees.
• D. They typically carry collateral to secure payments.

Answer: (A)

Eurobonds are typically issued in markets outside the issuer’s domestic market and are usually unsecured, with no collateral backing the payments. Because investors rely on the issuer’s credit quality rather than collateral, rating agencies assess and publish ratings for these bonds. That combination—unsecured status and credit ratings—is what this statement captures. The other options don’t fit because eurobonds are not inherently unrated; they are often rated by agencies. They are not guaranteed by government guarantees as a rule, and they do not typically carry collateral to secure payments.

Eurobonds are typically issued in markets outside the issuer’s domestic market and are usually unsecured, with no collateral backing the payments. Because investors rely on the issuer’s credit quality rather than collateral, rating agencies assess and publish ratings for these bonds. That combination—unsecured status and credit ratings—is what this statement captures.

The other options don’t fit because eurobonds are not inherently unrated; they are often rated by agencies. They are not guaranteed by government guarantees as a rule, and they do not typically carry collateral to secure payments.