Yankee Bond Roundtable (January 2024)

The dollar bond market had dipped as a source of funding for European companies during the recent economic and interest rate turmoil, but in recent months it has sprung back. Keen appetite for European bank and corporate credit has tempted issuers once again to explore the deep, liquid market of the US.

Investors are broad-minded on credit and will consider a wide variety of issuers at the right price, out to long tenors. The market therefore holds a potentially useful pool of capital that issuers can use to vary their funding. For companies financing M&A, in particular, Yankee bonds allow a large sum to be raised in one go, reducing the worry and hassle of picking multiple market windows.

European companies’ dollar issuance has already returned to the long term average of 25% of their bond funding, and market participants expect this share to grow.

GlobalCapital gathered three leading Yankee issuers, three experienced investors and some investment bankers active in the market for a virtual roundtable discussion on the market in early December.

As the speakers pointed out, for the right issuer in the right tenor at the right time, dollars can offer pricing to beat euros. But accessing the market is no walk in the park — issuers need to study the demand, court the investors and be willing to pay an attractive price.

With US interest rates widely seen as having peaked, dollar bonds are poised on the brink of a bull run. Yield-driven investors in particular are eager to buy before rates start falling, and they see value in European credit.