Global Depositary Note: Definition & Meaning | Bondfish
Global Depositary Note (GDN) is a certificate that represents a local-currency bond, allowing international investors to trade and settle it in U.S. dollars through global clearing systems such as Euroclear, Clearstream or DTC.
What it means
A GDN does for bonds what a depositary receipt does for shares. A depositary bank holds a bond issued in a local market — say, a government bond denominated in an emerging-market currency — and issues a note against it that international investors can hold in their existing accounts. GDNs are designed to be fully fungible with the underlying bonds, so positions can move between the local (onshore) and international (offshore) markets.
The structure is used mainly for emerging and frontier market debt, by both sovereign and corporate issuers who want to reach a wider investor base. Major depositary banks such as BNY and Citi run GDN programs.
Why it matters for bond investors
GDNs remove two practical barriers to buying local-market bonds: the need for a local custody account and settlement in an unfamiliar currency. Payments are made in U.S. dollars while the underlying instrument remains a local-currency bond — so the investor keeps the economic exposure to that currency and to the issuer’s credit risk, but with simpler operations. That makes GDNs a common route into emerging-market sovereign bond exposure. Remember that easier access does not reduce currency swings or default risk in these markets.
Related terms
This definition is for general information only and is not investment advice. Bond investing involves risk, including possible loss of principal.