Kangaroo Bond

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Definition of 'Kangaroo Bond'

A Kangaroo Bond is a bond that is denominated in Australian dollars but is issued by a foreign entity. The term "Kangaroo Bond" is derived from the fact that these bonds are often issued by Australian subsidiaries of foreign companies.

Kangaroo bonds are typically issued by companies that are based in countries with high interest rates, such as Japan and the United States. These companies issue Kangaroo bonds in Australia because the interest rates are lower here.

Kangaroo bonds are popular with investors because they offer a higher yield than bonds that are denominated in the same currency. However, they also carry a higher risk, as they are subject to the Australian dollar exchange rate.

The Australian government does not issue Kangaroo bonds. However, the Reserve Bank of Australia (RBA) does purchase Kangaroo bonds from the secondary market. This helps to keep the interest rates on Kangaroo bonds low.

Kangaroo bonds are a popular investment for both Australian and foreign investors. They offer a higher yield than bonds that are denominated in the same currency, but they also carry a higher risk.

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