By Jaspreet Kalra
(Reuters) -U.S. companies are lining up to borrow in euros with bond sales hitting a record $100 billion so far this year, reflecting attractive European funding conditions and a growing willingness among issuers and investors to shift away from the dollar.
The likes of Google-parent Alphabet, Visa, PepsiCo, payments firm Fiserv and Verizon have sold bonds denominated in euros recently.
This offshore fundraising, called “reverse Yankees” in a nod to Yankee bonds sold by foreign companies in the United States, is up from just over $78 billion for the whole of 2024, LSEG data shows.
The trend is seen as positive for the euro given the dollar’s 10% drop this year on concerns about erratic U.S. trade policy and as European Central Bank chief Christine Lagarde urges a “global euro moment”.
“There is a wall of currency ready to be deployed into European credit,” said Matteo Benedetto, EMEA co-head of investment grade syndicate at Morgan Stanley.
“Behind those inflows, there is a broader trend of asset reallocation into euros and potentially away from the dollar,” said Benedetto, who arranges European debt sales for companies.
ING said in a report this month that fund flows point towards an increasing preference for euro-denominated debt among global issuers.
Investors and bankers reckon that the record run for reverse Yankees is likely to persist given lower borrowing costs, favourable currency market dynamics and a diversification away from dollars, although analysts say it’s early days in calling a turning point in the dollar’s standing.
For now, the cost of issuing bonds in euros after swapping the raised funds back to dollars, across similar credit quality and maturity profiles, is better or comparable for U.S. companies issuing the same in dollars, Benedetto said.
The pickup in reverse Yankee issuance this year has been led by non-financial firms, which have sold almost 50 billion euros ($59 billion) of bonds, up 32% year-on-year.
Alphabet, which hit a market capitalisation of $3 trillion for the first time on Monday, raised almost 7 billion euros in a bond sale in May, Fiserv tapped the market for 2.175 billion euros the same month and Verizon raised 2 billion euros in July by selling seven and 12-year notes.
Alphabet, Visa, PepsiCo and Verizon did not respond to requests seeking comment. Fiserv declined to comment on its bond sale.
U.S. financial firms, meanwhile, have nearly doubled such issuance to roughly 35 billion euros this year, LSEG data shows.
