European banks relied more heavily on US markets at the start of this year to sell longer-term debt, in a sign of growth in so-called “yankee” issuance.
Over a third of bonds sold by European banks with a tenor of 6 to 12 years were denominated in dollars in the first quarter, compared to 26 per cent in 2016, according to analysis from Fitch Ratings.
Only 31 per cent of bonds of this duration were sold in euros over the same period, down 14 percentage points compared to 2016.
“This trend reflects the growing use of the Yankee market by European banks, as the deeper US market can offer savings compared with borrowing in euros at similar maturities,” the rating agency said in a report on Wednesday.
Over recent years, US companies have tapped low rates in Europe to sell “reverse yankee” bonds. But at the start of 2017, yankee issuance ran at a faster pace than reverse yankees, with analysts saying it was no longer obviously cheaper to issue in euros.
Interest rates in Europe have risen over the past 12 months. The 10-year German bund yield is now at 0.4 per cent, compared to 0.13 per cent a year ago.
Fitch also pointed to an “economic boost” for European banks that has led to tighter credit spreads.