General Electric attracted €22bn of orders for an €8bn bond sale on Wednesday, one of the largest ever deals in the single currency, showing the depth of demand for long-dated issuance from US borrowers.
Reverse Yankee deals — where US companies raise money in the euro bond market — have become increasingly common in the recent years, with companies such as Pfizer and Coca-Cola raising multibillion-euro deals this year.
But the market has not seen a deal on the scale of General Electric’s trade since February 2015, when Coca-Cola raised €8.5bn across five tranches — the largest ever reverse Yankee.
The sale by GE revealed strong appetite for long term debt following Emmanuel Macron’s victory in the French presidential election, as the conglomerate sold €2.25bn of 12-year and €2bn of 20-year debt.
“The long-end is open again — you’ve got €4.25bn placed across 12- and 20-year here,” said Frazer Ross, a managing director on the debt syndicate desk at Deutsche Bank, one of the banks running the deal.
“The market hasn’t seen a 20-year in six months but GE has shown that, if you’re willing to price it appropriately, the demand is there.”
The last 20-year euro corporate bond came from Norwegian oil and gas company Statoil in November, which traded down as lows as 91.50 cents on the euro as rates steepened.
US companies Allergan and Baxter International have already announced investor meetings in Europe next week ahead of planned bond sales. Allergan’s deal would be its first euro-denominated bond, with the US pharma company targeting a “multi-tranche benchmark transaction”.
Additional reverse Yankee issuance looms, particularly as the cost of swapping euro debt back into dollars has improved since the start of the year.
“US companies generally prefer longer-dated funding, so the lack of a bid for duration is part of the reason the start of the year was relatively quiet on the reverse Yankee front,” said Mr. Ross.
“Now the long-end is open, the basis swap has improved and markets are buoyant following the French election, it’s giving a breath of fresh air to the reverse Yankee market.”
GE’s deal is the fourth largest euro corporate bond sale ever, tied with an €8bn deal from Volkswagen in March and a deal from Deutsche Telekom in 2001. Belgium’s AB InBev raised the largest ever euro corporate bond last year, a €13.25bn deal funding its merger with rival brewer SABMiller.