American companies are pushing into Europe this year to borrow at lower costs, putting less weight on the U.S. credit market.
That’s based on reporting from Bloomberg, which shows a wave of euro-denominated bond deals from big U.S. names as they take advantage of lower interest rates across the Atlantic.
This week, Verizon Communications Inc. sold €2 billion (or $2.31 billion) worth of debt in Europe, its first bond deal there since early 2024. That followed July transactions by FedEx Corp. and PepsiCo Inc., which both returned to the euro market for the first time since 2021.
These aren’t isolated. As of now, U.S. companies have raised €116.3 billion (roughly $134 billion) in Europe. That’s just €4.4 billion short of a full-year record, with five months still left in 2025.
Companies target ECB’s lower rates while Fed holds back
Some firms, like FedEx and PepsiCo, are refinancing maturing euro bonds. But overall issuance is higher because of one thing: the European Central Bank is already cutting rates, while the Federal Reserve hasn’t lowered a single one since December.
“From an issuer’s point of view, it’s less expensive to borrow in euros,” said Gordon Shannon, portfolio manager at TwentyFour Asset Management.
The interest rate outlook in the U.S. has turned blurry. Job growth slowed sharply over the last three months, and the unemployment rate climbed, giving the Fed more space to start easing. U.S. Treasury yields dropped slightly after the labor data came out Friday, but they’re still near early July levels. That’s not enough of a dip to change the fact: Europe remains the cheaper place to borrow. For companies that hedge currency risk, this cost advantage might narrow soon, but right now, the savings are real.
Foreign investors drop U.S. bonds as tariff tensions grow
Hans Mikkelsen, U.S. credit strategist at TD Securities, said the trend is likely to stick around. With President Trump’s White House announcing new tariffs just this week, foreign investors have another reason to avoid U.S. corporate bonds.
“There will be less demand for U.S. corporate bonds and more demand for non-U.S. corporate bonds,” Hans said. “U.S. companies will have the same issuance needs. So they have to realize that they have to fund themselves more in other currencies.”
The shift isn’t just one-sided. In July, U.S. companies issued $9 billion of euro debt, way above the average $3 billion for the month in the past three years. At the same time, European companies only borrowed a little over $2 billion in U.S. dollars, down sharply from their usual $13 billion monthly average.
That imbalance is part of why U.S. dollar bond sales missed expectations in July. Wall Street dealers had forecast $100 billion in sales. Actual volume came in closer to $81 billion, Bloomberg data shows. That miss is directly tied to the rush into Europe and the pullback from overseas borrowers in the U.S. market.
Still, the shift is helping U.S. bond valuations stay strong. For much of the past week, spreads on high-grade U.S. corporate bonds were at their tightest level of 2025, just 0.76 percentage points as of Thursday. That’s despite the pressures from economic uncertainty and foreign investor fatigue.
The picture becomes clearer when looking at the overall supply. “If you take this overarching trend of net supply being down, banks issuing less because of regulatory reform expectations as was the case this past quarter and more U.S. companies are issuing in Europe, all that does is further reinforce the positive technicals in the U.S. market,” said John Servidea, global co-head of investment-grade finance at JPMorgan Chase & Co.
So far, every factor, from rate policy to global tariffs, is pushing American companies to turn to Europe for cheaper funding. Whether they’re refinancing old debt or meeting new funding needs, the euro bond market is where the money is right now.
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