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In the run up to the euro, US and other non-European corporates are suddenly becoming more self-conscious about their positioning in the European capital markets. Companies wanting to tap the investor potential of the post-Emu single-market who don't want to make the leap of faith involved in the euro have seized upon an alternative a strategic Deutschmark issue. It is hoped that building relationships now with Deutschmark investors will pay off when the competition for funds heats up after 1999.
Ford Motor Credit Corp issued a Dm2 billion ($1.1 billion) 10-year bond on June 8. This was followed by a similar large deal from US tobacco maker Philip Morris on June 12. Toyota Motor Credit Corp was ahead of the game, though, with its Dm750 million seven-year issue on May 27, managed by Paribas and Barclays Capital. TMCC has issued in Deutschmarks before, though this tended to be opportunistic deals picking up currency arbitrage.
"Our strategy is to ensure access to European investors," says Jerome Lienhard, TMCC's corporate treasury manager. He thinks that the corporation's next European deal could be euro-denominated given sufficient investor demand.