The tax regime that’s been the backbone of the Eurobond market since its inception 50 years ago is now threatened by the same regulatory overhaul driving corporate borrowers to issue bonds rather than take bank loans.
Half a century ago, a London bond deal for an Italian highway operator, denominated in U.S. dollars and arranged by a U.K. bank founded by a Jew fleeing Germany spawned a $4 trillion-a-year global market.
Valerie Thompson went from a childhood hawking fish, fruit and vegetables in London’s run- down East End to a Eurobond star at Salomon Brothers Inc. when it was the world’s biggest trading firm. Like the successful trader she was, she got out at the top.
Eurodollar bonds produced better risk-adjusted returns than Treasuries in the past 25 years. Now they’re poised for their second-only losing year, showing how much the prospect of an end to the Federal Reserve’s asset purchases has rattled global markets.
Siegmund Warburg , the uprooted German financier who rose to fame in postwar London, considered banking something more than a way to make money. To him, it was a calling, as job candidates learned fast.