U.S. companies are increasingly turning to the euro for their borrowing needs, with bond sales reaching a record $100 billion so far this year. This trend is a result of favorable funding conditions in Europe and a growing willingness among issuers and investors to move away from the dollar.
Major U.S. corporations such as Alphabet, Visa, PepsiCo, Fiserv, and Verizon have recently issued bonds denominated in euros. This offshore fundraising, known as “reverse Yankees,” has surged from just over $78 billion for all of 2024, according to LSEG data. This shift is seen as a positive sign for the euro, which has gained against the dollar amid concerns about U.S. trade policy and as European Central Bank chief Christine Lagarde advocates for the currency’s global role.
Experts believe this record run for reverse Yankees will continue due to lower borrowing costs, favorable currency market dynamics, and a desire for diversification away from the dollar. For U.S. companies, the cost of issuing bonds in euros and swapping the funds back to dollars is now comparable or even better than issuing in their home currency.
Non-financial firms have been leading this surge, selling nearly $59 billion worth of bonds this year, a 32% increase year-on-year. For example, Alphabet, which recently hit a $3 trillion market capitalization, raised almost 7 billion euros in a single bond sale. Meanwhile, U.S. financial firms have nearly doubled their euro-denominated issuance to approximately $35 billion this year.
Investors, such as Zurich-based Vontobel Asset Management, are actively buying these euro bonds from U.S. companies. According to Christian Hantel, head of global corporate bonds at Vontobel, this allows investors to diversify their portfolios away from their traditional European holdings.
This surge in euro-denominated issuance has also boosted the presence of U.S. companies in traditional European debt indices, making their offerings difficult to ignore. The market has shown it can readily absorb these sales, offering issuers greater flexibility in terms of size, price, and the maturity of the bonds they issue.
