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(Bloomberg) — The giants of corporate America from Pfizer Inc. (PFE) to Alphabet Inc. (GOOG, GOOGL) are borrowing in euros like never before as the anxiety triggered by President Donald Trump’s tariff threats pushes them to hunt for alternative funding avenues in case their home market freezes up.
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A record number of these so-called reverse Yankee deals have been sold this year at a total value of more than €83 billion ($94 billion), up 35% on 2024, according to data compiled by Bloomberg. That’s nearly 14% of overall euro corporate issuance, the data shows.
This all comes after Trump’s tariff pronouncements sparked market mayhem in April. On Friday, Moody’s (MCO) downgraded its credit rating on the US, stripping the world’s largest economy of its last triple-A rank.
For decades the US corporate bond market has been the go-to destination for money managers. But early signs are emerging that Trump-induced dollar volatility, inflated Treasury yields and fears about the country’s debt burden are fueling a gradual reweighting toward the Old Continent. That would delight euro zone leaders desperate to bolster the bloc’s capital markets.
“The increasing depth of the European market is a massive factor,” according to Andrew Menzies, head of debt capital markets at Societe Generale SA. Chunky deals and big issuance days used to be a feature in the US, he says, but “you see it now in Europe as well, as typified by the supply in recent days being taken down relatively easily.”
The US remains by far the most liquid market, with nearly $7.5 trillion of bonds in Bloomberg’s main index of blue-chip US company debt, and Europe is the next biggest player with €2.85 trillion of bonds. But recent gains by the euro against the dollar are adding to the bullishness.
US companies now account for more than a fifth of a Bloomberg index of euro corporate bonds. While this isn’t unprecedented — a negative deposit rate in Europe attracted many reverse Yankees in the easy money era — the percentage has increased since the start of the year to 21.9%.
“You cannot be faulted as a chief financial officer or treasurer to be accessing euros right now,” says Fabianna Del Canto, co-head of EMEA capital markets at Mitsubishi UFJ Financial Group Inc. “It’s an attractive relative cost, with low coupons in a stable environment versus risking the unknown in the US.”