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A domestic currency denominated bond with all payments marked to the market in terms of a foreign currency. All coupons are computed against the principal denominated in the foreign currency value at the issue date and converted into the domestic currency at the spot exchange rate on the coupon payment date. Repayment of principal is converted into the domestic currency at the spot rate at maturity. In short, the only difference between this instrument and a true foreign bond is that the issuer is responsible for conversion of all payments into the investor's domestic currency.
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