Explain Dual Currency Bond
A dual currency bond is a straight fixed-rate bond that is issued in one currency and pays coupon interest in that similar currency. At maturity, the principal is again paid in a second currency. Coupon interest is often at a higher rate as compared to comparable straight fixed-rate bonds. The amount of the dollar major repayment at maturity is set at inception; often, the amount permits for some appreciation in the exchange rate of the stronger currency. From the investor's viewpoint, a dual currency bond involves a long-term forward contract.