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American companies are taking advantage of the European debt market at a record rate, attracted by the lowest indebtedness costs in the continent and the opportunity to diversify their sources of financing, since the uncertainty about the tariffs of President Donald Trump trigs great changes in the market.
The strong demand for European debt investors has allowed US non -financial companies to request 40 billion euros borrowed in the so -called Yankee Inverse Agreements, in which US groups raise money in the bond market called in euros, according to the Bank of America data. Since then, new agreements have been priced worth multiple billions of euros.
Google Parent Alphabet and Telecoms Group T-Mobile Us are among the companies to have multimillionaire agreements with a price, borrowing € 6.75 billion and € 2.75 billion, respectively. Pfizer issued 3.3 billion euros of bonds in four sections on Wednesday. If the issuance rate by US companies in Europe persists, the figure of the whole year will exceed the registration of € 88 billion established in 2019.
This year’s broadcast is compared to the 30 billion euros of euro bonds that had been issued by US companies in May last year. For the first time, US issuing now represents a greater proportion of the non -financial investment degree in Europe than borrowers of any other country, according to Bofa data.
This year’s increase has also been promoted by uncertainty about the scale and consequences of the rates of the president of the United States, since some companies have chosen to quickly borrow and get their funds in case an economic shock increases the costs of loans.
“In a year that has been relatively volatile, global issuers want to get ahead of their financing budget for the year. Therefore, he has seen what is probably a relatively loaded year of the main issuers,” said Marc Lewell, head of Syndicate de Bond Emea/Apac in JPMorgan.
Large US companies with operations in several countries sometimes raise money in Europe instead of the United States as a way of diversifying their financing sources and providing natural coverage against fluctuations of the exchange rate. This reverse issuance of Yankee, appointed in contrast to the so -called Yankee bonds sold by foreign borrowers in US markets, becomes more attractive, the greater the difference in loan costs.
The gap in yields has been expanded as the European Central Bank has reduced interest rates faster than the Federal Reserve. The FED voted last week to maintain the range of federal funds at 4.25 percent to 4.5 percent for the third consecutive meeting, while the ECB reduced its interest rate to 2.25 percent last month.
The propagation between the United States Treasury bonds to 10 years and the yields of the German BUND reached more than two percentage points in December, the highest since 2019, although since then it has been pressed to 1.8 percentage points.
This is reflected in credit yields, where additional indebtedness costs paid by investment grade companies in the United States last month were two percentage points above those paid in Europe.
“Corporate issuers in the United States who have a European business or a basis of European assets … They want to take advantage of the fact that euro coupons are significantly lower than dollar coupons,” Lewell said.
Those companies that collect and spend euros can also be isolated against more monetary movements after dramatic exchange rate changes in recent months. The euro has fallen from $ 1.12 at the end of September to $ 1.01 in early February, before recovering at $ 1.12, since markets have tried to measure the impact of Trump’s erratic tariff policy. However, for those who raise money to bring back to the US, the currency coverage costs benefit from the lowest rates.
Damien Hill, an Insight Investment Corporate Bond Fund Administrator, said the recent emission wave had been promoted by a cheaper in all -inclusive financing costs for US companies that take borrowed in euros.
“While this opportunity exists, we hope that the volume of US emitters who borrowed in euros will remain high,” he added.
Inverse Yankees represent 30 percent of the euro broadcast this year, according to PWC data. Usually, the figure is less than 20 percent.
Barnaby Martin, Bofa European credit strategist, said French companies no longer dominated European corporate issuance. “The great implication of this is that the euro credit market will probably be more sensitive to US political decisions in the future,” he wrote in a note.
Inverse Yankees bonds also serve as a sign of strength for US companies, which allows them to show lenders who have multiple large capital groups available and are not limited to executing large transactions in the US.
“Reverse Yankee is a very powerful sign to send to the dollar market …[that]You can carry out euro operations as large as the dollar operations in the market and that is very positive “for borrowers, said James Marriott, International Head of Debt Capital Markets at Wells Fargo.
