WITH 40% OF US corporate bond market issuance coming from overseas issuers so far in 2010, European borrowers, battered by a sovereign debt crisis, have found much-needed liquidity in the yankee bond markets, away from difficult markets at home. Although the migration to US capital markets is accelerating, the initial shift pre-dates the European liquidity crisis. The realization that funding diversification was no longer just a good idea but a necessity has brought an increasing number of European companies to the US public and private bond markets. As Larry Wieseneck, Barclays Capital’s head of global finance and risk solutions, explains. “The world has changed for the large cap CFO and treasurer in the past two years. It’s now prudent that you have buyers all over the world, because you just don’t know when or where the best market opportunity is going to appear, or where the next M&A deal will be, or whether events could occur that would lead to a ratings downgrade which would require a change in your capital structure. You need to make sure no single investor constituency ultimately has leverage over you.”
The US capital markets have been the most obvious gateway.