Eurobonds and foreign bonds were designed to allow lenders and borrowers to access bond markets outside of their country of origin. It's a way they can create cheaper ways for lenders and borrowers to do business with each other. The best bond for the situation depends on an individual's investment needs.
In eurobonds, a person, or company, will borrow money from a lender in a currency different from the borrower's local currency. For example, an American company might want to issue a bond in the Swiss bond market and have the money borrowed in euros. The names say what money is connected to eurobonds. For example, euroyen is denominated in Japanese yen, while the euroswiss is done with a Swiss franc.
A foreign bond will always have a borrower seeking funding in a foreign bond market in the country's currency of where that bond is issued. For example, it's considered a foreign bond if a French company is using yen in Japan. These bonds have more colorful names connected to the country. Some of them are the Yankee (U.S.), Samurai (Japan), Bulldog (Great Britain), Kangaroo (Australia), and Heidi bonds (Switzerland).
Both types can be a tax-friendly way for companies to raise money in different foreign markets. With a eurobond, a company won't fall under the wrath of one country’s tax policy. This form of debt issuance allows for a potentially low-cost way to raise money in the world bond market. The eurobond market allows investors to lend money in overseas markets without being double-taxed by two countries.
Both bonds carry a currency or exchange rate risk. It occurs in the holding of any investment in a currency different from that of the lender's home country. Either the borrower or the lender needs to perform some sort of currency exchange throughout the bond’s life. These exchange rate movements can either be beneficial or detrimental to either party, which brings on the risk.