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US Firms Chase Euros: Bond Sales Surge
12 Feb
Summary
- US investment grade corporate bonds yield 4.82% versus 3.12% in Europe.
- US companies have raised nearly €25 billion in euro and sterling debt.
- This year's sales are poised to surpass the busiest start since 2007.
US corporations and financial institutions are experiencing the busiest start to the year for issuing debt in euro and sterling since 2007. Nearly €25 billion has been raised in these currencies by these firms year-to-date, with further offerings expected to push this total past previous highs. Major players like JPMorgan Chase & Co and Goldman Sachs Group Inc. are leading the issuance with their first euro-denominated benchmarks of the year.
Companies such as T-Mobile US Inc., Ford Motor Co., and WP Carey Inc. are also issuing debt following their recent earnings reports. While some firms regularly utilize European markets due to existing operations, others are actively seeking to diversify funding away from the US dollar. This strategy is particularly attractive given the diverging interest rates, with US investment grade corporate bonds yielding 4.82% compared to 3.12% for their European counterparts. This divergence offers significant cost advantages, especially for companies with European operations that avoid currency exchange costs.
