Large American companies are turning to Europe for cheaper euro loans

Large American companies are increasingly tapping into the European debt market at a record pace, drawn by lower borrowing costs on the continent. Companies have also taken advantage of the opportunity to diversify their sources of financing, as uncertainty related to President Donald Trump's tariffs has triggered significant market fluctuations.

With ECB rates at 2.25% and the Fed stable 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 American companies. Notably, European interest rates were kept artificially low, so it made sense for American companies to borrow where it was cheaper as long as the euro did not appreciate too much against the US dollar.

The average yield of an index of American corporate bonds was 5.3%, while the European equivalent was 3.18%, with last month's difference being the widest in three years. Google's parent company, Alphabet Inc., raised 6.75 billion euros the day after raising 5 billion dollars in the United States. It will pay a coupon of 3.375% for its euro bond maturing in 2037 and 4.5% for its US dollar maturity in 2035.

Financial research data reveals a shift in corporate borrowing towards Europe.