From Harley Davidson to Colgate-Palmolive, U.S. companies are flocking to borrow...
LONDON - From Harley Davidson to Colgate-Palmolive, U.S. companies are flocking to borrow in euros and their record issuance is breathing life into a market where yields have been hammered by the European Central Bank’s renewed stimulus push.
That accounted for 27% of a total 346 billion euros of euro-denominated investment-grade corporate bond issuance, according to the data. The rush is driven primarily by rock-bottom borrowing costs in the euro zone, where interest rates are at minus 0.5% and the average yield on corporate euro-denominated bonds has fallen to 0.48% — down from 1.25% at the start of 2019.
Mergers and acquisitions are another factor — fintech Fidelity National Information Services, for example, raised 5 billion euros back in May as part of a multi-currency deal to finance its purchase of card payment firm Worldpay.The reverse Yankee boom is welcome news for European bond buyers dismayed at the yield collapse triggered by the ECB’s asset purchase program.
BofA’s Martin reckons U.S. names could lure giant Asian life insurers to invest in euro debt. These investors hold over 10% of the U.S. credit market, International Monetary Fund data shows, but they are less familiar with euro zone companies.
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