Large U.S. companies were increasingly tapping Europe’s debt market at a record pace, attracted by lower borrowing costs on the continent. The companies also took advantage of the chance to diversify their funding sources, as uncertainty over President Donald Trump’s tariffs triggered big market swings.

With the ECB rates at 2.25% and the Fed holding steady at 4.25% to 4.5%, data compiled by Bloomberg showed that yield spreads of 0.018% to 0.2% made borrowing in Euros significantly cheaper for U.S. firms. Notably, European interest rates were held artificially low, so it made sense for U.S. corporations to borrow where it was cheaper as long as the Euro did not appreciate too much against the U.S. dollar.

The average yield on an index of U.S. corporate bonds was quoted at 5.3%, and the European equivalent was 3.18%, with the difference last month being the widest in three years. Google’s parent company, Alphabet Inc., raised €6.75B the day after raising $5B in the United States. It will pay a coupon of 3.375% for its Euro bond maturing in 2037 and 4.5% for its U.S. dollar 2035 maturity.

Financial Research data reveals corporate borrowing shift to Europe

Source: Bloomberg Large U.S. companies increasingly borrow from Europe.

Financial research data confirmed that corporate America was hedging across the Atlantic like never before as Pfizer (PFE), Alphabet Inc. (GOOGL), and others issued record Euro debt of over €83B in 2025 (+35% compared to 2024)—nearly 14% of overall euro corporate issuance. Anxiety from Trump’s tariff chaos, Moody’s U.S. downgrade, and U.S. dollar volatility drove them to seek alternative European financing routes in case their domestic market froze.

According to the Founder of Tolou Capital Management, Spencer Hakimian, American companies were going to Europe to raise capital in Euros because it was apparently more stable, easier, and cheaper to borrow in Frankfurt than in New York. 

“You cannot be faulted as a chief financial officer or treasurer to be accessing euros right now…It’s an attractive relative cost, with low coupons in a stable environment versus risking the unknown in the U.S.”

–Fabianna Del Canto, Co-head of EMEA capital markets at Mitsubishi UFJ Financial Group Inc. 

The President of International for Bank of America, Bernard Mensah, also pointed out that Europe was an incredibly wealthy region, yet much of this capital was exported largely to the USA rather than being reinvested efficiently within the EU. He added that while this opportunity still existed, the EU had yet to fully seize it.

Shannon prefers reverse Yankees to U.S. dollar-denominated bonds

Portfolio Manager at TwentyFour Asset Management Gordon Shannon said he preferred to reverse Yankees to U.S. dollar-denominated bonds because he would rather own German Bunds than US Treasuries. Kaspar Hense, a Fixed Income Portfolio Manager at RBC BlueBay, echoed Shannon’s sentiment by also claiming that continuously high Treasury yields driven by high U.S. debt and deficits meant high borrowing costs for U.S. households and companies.

The ECB’s deposit rate was currently 1.75% lower than the U.S. Federal Reserve’s, making borrowing in Euros much cheaper. Companies that did not need to convert their debt into U.S. dollars saved even more. Even those who made the conversion could still find advantages, such as lower costs.

Investors expect the ECB to cut rates at least three more times this year after lowering them in January to 2.75%. Meanwhile, inflation in the U.S. pushed back expectations of Federal Reserve rate cuts, with traders now predicting just one small reduction by the end of 2025.

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