Analysis-From Alphabet to Visa, US giants drive | Money News

By Jaspreet Kalra

(Reuters) -U.S. corporations are lining up to borrow in euros with bond gross sales hitting a report $100 billion to this point this 12 months, reflecting enticing European funding circumstances and a growing willingness amongst issuers and buyers to shift away from the greenback.

The likes of Google-parent Alphabet, Visa, PepsiCo, funds firm Fiserv and Verizon have bought bonds denominated in euros just lately.

This offshore fundraising, referred to as “reverse Yankees” in a nod to Yankee bonds bought by international corporations within the United States, is up from simply over $78 billion for the entire of 2024, LSEG information exhibits.

The trend is seen as constructive for the euro given the greenback’s 10% drop this 12 months on issues about erratic U.S. commerce coverage 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,” mentioned 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,” mentioned Benedetto, who arranges European debt gross sales for corporations.

ING mentioned in a report this month that fund flows level in direction of an rising desire for euro-denominated debt amongst world issuers.

Investors and bankers reckon that the report run for reverse Yankees is probably going to persist given decrease borrowing prices, beneficial currency market dynamics and a diversification away from {dollars}, though analysts say it is early days in calling a turning level within the greenback’s standing.

For now, the price of issuing bonds in euros after swapping the raised funds back to {dollars}, throughout related credit high quality and maturity profiles, is healthier or comparable for U.S. corporations issuing the identical in {dollars}, Benedetto mentioned.

The pickup in reverse Yankee issuance this 12 months has been led by non-financial companies, which have bought nearly 50 billion euros ($59 billion) of bonds, up 32% year-on-year.

Alphabet, which hit a market capitalisation of $3 trillion for the primary time on Monday, raised nearly 7 billion euros in a bond sale in May, Fiserv tapped the market for two.175 billion euros the identical month and Verizon raised 2 billion euros in July by promoting seven and 12-year notes.

Alphabet, Visa, PepsiCo and Verizon didn’t reply to requests looking for remark. Fiserv declined to touch upon its bond sale.

U.S. financial companies, in the meantime, have almost doubled such issuance to roughly 35 billion euros this 12 months, LSEG information exhibits.