02 März 2021

Europe is at the forefront of the Yankee bond market, with France placing 6th worldwide, according to an internal Linklaters study

  • Over the last 5 years 40% of all Yankee bonds issued have come from Europe
  • France is the 3rd largest issuer in Europe and the 6th worldwide

Yankee bonds are U.S. dollar (USD) denominated debt securities that are issued or guaranteed by non-US entities. These securities are primarily intended for U.S. investors and are generally governed by New York law.

Yankee bonds allow foreign entities to obtain or refinance U.S. dollar funding. Yankee bonds can also be used to invest in existing U.S. dollar-linked business operations or for future acquisitions in the United States.

Luis Roth, Partner in Capital Markets at Linklaters Paris, said:

“Bond issues have the advantage of offering good visibility, thanks to long maturities and fixed rate interest payments, which attracts both issuers and investors. In addition to offering diversification of funding sources beyond the local or regional bond markets, Yankee Bonds also allow issuers to avoid the foreign exchange risks associated with a fluctuating dollar exchange rate - a valuable asset, especially in times of crisis.”

According to an internal Linklaters study, Europe is at the forefront of issuing these securities worldwide: over the last 5 years, 40% of the Yankee Bonds issued came from the continent. France is the third largest issuer in the region (14% of issues in volume, 15% in value), behind the United Kingdom and Germany, and ahead of Switzerland and the Netherlands. These 5 countries alone account for 70% of the continent's issuances by volume, and 28% of global issuances over the last 5 years (2016 - 2020).

Worldwide, the most frequently issued Yankee bonds are Investment Grade (rating of BBB- or higher) covering 63% of issues (74% in Europe). This is followed by High Yield Corporate bonds (19% worldwide, 25% in Europe). Linklaters' Capital Markets teams in France and in the European region work closely with our teams based in New York and around the world, covering complementary areas of expertise in local and New York law. We have deep experience advising issuers and underwriters on Yankee bond issues and can therefore propose the best solutions that work for all parties.

To learn more about Yankee Bonds, find out our guide “Introduction to Yankee Bonds”, available in French and in English.

Source: Refinitiv