In what some bankers have dubbed the ‘reverse Yankee’ market, the deal that showed the extent of the opportunity for US issuer’s came in the form of Coca-Cola’s €8.5 billion offering, the second biggest euro corporate deal in history.
Expectations are building that total euro corporate issuance this year could be on for a record.
There was just over €50 billion of investment-grade and high-yield bond issuance from US companies last year; Bank of America Merrill Lynch analysts believe that on the current run rate, sales could race to a new high of €100 billion by year-end.
Most of the deals have been from US companies that do not need to swap the proceeds back into dollars. Yields in euros are generally at least 100 basis points lower for highly rated corporates than they are in dollars.
This volume is a welcome development in the short term, satiating European investors’ acute need for yield.
But don’t be fooled into thinking that European disintermediation is driving this volume. In the first two months of the year, less than 20% of euro corporate issuance was from the continent’s borrowers.