Newsroom
Big American companies are increasingly turning to Europe to borrow money at lower costs, taking advantage of cheaper interest rates compared to those in the US.
Since the start of the year, US firms have issued €23.4 billion in bonds in Europe—more than in any year since 2007, according to Bloomberg. Major corporations like T-Mobile US, IBM, and top Wall Street banks are leading the way, drawn by the European Central Bank’s (ECB) lower interest rates.
Right now, the ECB’s deposit rate is 1.75% lower than the US Federal Reserve’s, making borrowing in euros much cheaper. Companies that don’t need to convert their debt into dollars save even more. Even those that do make the conversion can still find advantages, such as lower costs or diversifying their investors.
“For companies that can borrow worldwide, the gap in interest rates is huge, and it could get even bigger,” a Morgan Stanley executive told Bloomberg. “A company can take on euro debt at a lower interest rate and leave it in euros to help cover its European costs, reducing its overall expenses.”
This trend isn’t new—US companies issued about €108 billion in European bonds last year. But concerns about US economic policy, especially if Donald Trump returns to the White House, are driving even more interest in European borrowing.
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 US has pushed back expectations of Federal Reserve rate cuts, with traders now predicting just one small reduction by the end of 2025.
Politics is also playing a role. The threat of new US tariffs on Europe and possible inflation spikes under Trump have increased demand for protection against a stronger dollar. In fact, demand for these financial safeguards is now at a two-year high.
Some US companies are keeping their debt in euros, while others plan to swap currencies—essentially borrowing in one currency but repaying in another. Either way, the European bond market is proving to be a smart and cost-effective alternative for American businesses looking to save money and manage risks in uncertain times.
