USD vs EUR sovereign bonds: why the yields differ

The same issuer, two very different yields

Côte d'Ivoire borrows in both US dollars and euros. On this site you can see the result side by side: its euro bond maturing in 2032 yields around 5.3%, while its dollar bond maturing in 2033 — barely a year longer — yields around 6.3%. Same government, near-identical maturities, roughly a full point apart.

If the issuer's creditworthiness were the whole story, two bonds from the same government would yield about the same. They don't — and the reason is what the yield is actually made of.

A yield has two parts

The yield on any sovereign bond can be split into two pieces:

• A base rate — the "risk-free" interest rate for that currency and maturity.
• A credit spread — the extra yield investors demand for the risk that this particular issuer might not pay in full.

Roughly: yield ≈ base rate + credit spread. The credit spread is about the country. The base rate is about the currency — and that's where the dollar-versus-euro gap comes from.

The base rate is set by the currency, not the country

A dollar bond is priced against US Treasury yields — the benchmark risk-free rate for dollars. A euro bond is priced against German Bund (or euro swap) yields — the benchmark for euros. These two benchmarks are set by two different central banks and two different economies, so they're rarely the same.

Through the mid-2020s, euro base rates have generally sat below dollar base rates. So a euro-denominated bond starts from a lower floor — and ends up with a lower headline yield — even when the issuer's credit risk is identical. The currency backdrop, not the country, drives most of the visible gap. (This relationship isn't fixed: if euro and dollar rates converged, so would the gap.)

So don't compare raw yields across currencies

This is the practical takeaway. Putting a euro bond's 5.3% next to a dollar bond's 6.3% and concluding the dollar bond is "riskier" or "better value" mixes two different things together. You'd partly be comparing US interest rates with euro-area interest rates — not the issuer's credit.

To compare credit properly, you compare each bond's spread over its own base curve (dollar bond versus Treasuries, euro bond versus Bunds), which strips the currency out. Comparing raw yields only works within a single currency.

How this site handles it

Because USD and EUR curves aren't directly comparable, this site keeps them separate: each currency's bonds are shown in their own rows, and a sovereign's dollar and euro bonds trace two distinct yield curves rather than one blended line. When you scan an issuer with both, read the USD bonds against each other and the EUR bonds against each other.

Two footnotes worth knowing

• Currency risk is the investor's. A euro bond pays euros; a dollar bond pays dollars. Whichever you'd measure your returns in, holding the other currency's bond adds exchange-rate risk on top of the bond itself.
• The spreads aren't perfectly identical. The same issuer's USD and EUR credit spreads are broadly similar but not exactly equal — differences in the investor base and the cost of hedging between currencies (the "cross-currency basis") can nudge them apart. It's a second-order effect; the base-rate difference does most of the work.

Information only. This guide explains how currency affects bond yields; it is general educational material, not investment, financial, legal or tax advice, and not a recommendation to buy or sell any security. Figures are indicative, model-derived values.