Euro-denominated bonds: US corporates lock in low yields and long duration

By:
Louise Bowman
Published on:

Non-financial US corporates have launched a flurry a euro-denominated bonds in recent months, driven by attractive yields and the euro/dollar swap rate.

"For a large multinational corporate, FX volatility in the current environment could have a massive impact on financial performance," says Mark Bamford, global head of DCM syndicate at Barclays in New York. "Whether corporates use outright capital markets financings or swaps to hedge assets and revenues, this is now the most important issue to get right, right now."

A number of US multinational took this on board very swiftly after the ECB’s PSPP announcement at the beginning of the year and the ' reverse yankee’ phenomenon of the last few months took hold. The prospect of historically cheap rates in Europe versus impending rate rises at home saw a slew of US borrowers beat a path to Europe’s door. 

"There is a general fear of what the euro going from 1.30 to par means," warns Bamford. But, he adds: "You have much more flexibility if you get your...