American companies are increasingly borrowing in euros, with bond sales reaching a record $100 billion this year. This trend is driven by favorable European funding conditions and a shift away from the dollar by issuers and investors.
Major companies like Alphabet (Google’s parent), Visa, PepsiCo, Fiserv, and Verizon have recently issued euro-denominated bonds.
This method of offshore fundraising, known as “reverse Yankees”—a reference to Yankee bonds sold by foreign companies in the U.S.—has risen from just over $78 billion in 2024, according to LSEG data.
The trend supports the euro, reflecting the dollar’s 10% decline this year amidst concerns over U.S. trade policies and as ECB President Christine Lagarde highlights the “global euro moment.”
“There’s substantial currency ready to be invested in European credit,” said Matteo Benedetto, co-head of investment grade syndicate at Morgan Stanley for EMEA.
Benedetto noted a broader trend of reallocating assets into euros, potentially moving away from the dollar.
ING’s recent report indicates a rising preference for euro-denominated debt among global issuers.
Experts believe the trend for reverse Yankees will continue due to lower borrowing costs, favorable currency dynamics, and diversification from the dollar, though it’s too early to declare a definitive shift in the dollar’s status.
Currently, issuing euro bonds and converting the proceeds back to dollars is either more cost-effective or comparable for U.S. companies, Benedetto added.
This year’s surge in reverse Yankee issuance is led by non-financial firms, which have issued nearly 50 billion euros ($59 billion) in bonds, a 32% increase from last year.
Alphabet, which reached a $3 trillion market cap for the first time on Monday, raised nearly 7 billion euros in May, Fiserv issued 2.175 billion euros in the same month, and Verizon raised 2 billion euros in July through seven and 12-year notes.
Alphabet, Visa, PepsiCo, and Verizon did not comment on their bond sales, while Fiserv declined to comment.
U.S. financial firms have nearly doubled their euro bond issuance to around 35 billion euros this year, LSEG data shows.
Zurich-based Vontobel Asset Management is one of the investors buying euro bonds from U.S. companies.
“For investors, it’s an interesting diversification opportunity away from their core European allocations,” said Christian Hantel, head of global corporate bonds at Vontobel.
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The influx of euro-denominated bonds from American companies has increased the U.S. presence in traditional debt indices, making it significant, Hantel said.
By the end of August, U.S. corporate issuers made up nearly 19% of the iShares Core Euro Corporate Bond ETF, up from about 18% at the end of 2024, second only to France, Morningstar data shows.
Reverse Yankee bonds have been well-received in the euro area, offering more volume, price efficiency, and flexibility in bond maturities, said Giulio Baratta, global co-head of investment grade finance at BNP Paribas.
BNP Paribas and Morgan Stanley participated in Pfizer’s 3.3 billion euro bond sale in May, as per the pharmaceutical firm’s filing. BNP also assisted in IBM’s 3.5 billion euro issuance earlier this year, Baratta noted.
Baratta, leading BNP’s corporate debt capital markets, mentioned that U.S. firms have accessed debt maturities up to 20 years in euros, extending beyond the 5-to-12 year norm.
This is due to expectations of U.S. growth exceeding Europe’s, making American company debt attractive and enhancing the euro’s appeal amid a weakening dollar. The euro has risen nearly 14% this year to $1.17, with some analysts predicting it will reach $1.20.
The euro remains the second most used currency in international debt markets after the dollar, holding around a 39% share according to ING. This, along with central bank reserves and trade invoicing, indicates a potential shift from the dollar.
“This doesn’t mean avoiding U.S. corporates, but the opportunity to diversify from U.S. dollar assets into euro assets is something investors are increasingly considering,” said Connor Olvany, portfolio manager at LG Asset Management’s European Credit team in London.
($1 = 0.8497 euros)
(Reporting by Jaspreet Kalra; additional reporting by Yoruk Bahceli; Editing by Dhara Ranasinghe and Susan Fenton)
