European banks prefer to borrow in dollars

Dollar-denominated bonds have become increasingly popular among foreign companies. January was the month of record volume release of the so-called Yankee bonds. Of greatest interest to them are often European banks. To enter the U.S. market have pushed their initiative the European Commission, which adversely affect the holders of bank debt. From the beginning, foreign companies have issued dollar-denominated bonds worth 109.7 billion dollars, figures from Dealogic. This is 16% more than in January of 2010, and a record monthly volume for all time the account of such data. A total of 187 deals against 105 the previous year. Experts attribute the growing interest in "Yankee Bond" greater capacity and market liquidity of dollar assets. "The stakes are very low. If you have the ability to raise funds in U.S. dollars and a large base of investors, then you do it ", - told Bloomberg the executive director of debt capital markets Mizuho Securities USA Timothy Cox. The greatest activity in the U.S. bond markets are often foreign financial companies, led by European banks. They sold the paper to the amount of 39 billion dollars on January 24 bids on the bonds of the banking sector, denominated in dollars fell to 2.03% - the lowest since April 2010, figures from the Bank of Amerca Merrill Lynch. Lower rates for "Yankee Bond in January, took advantage of HSBC, BNP Paribas, Lloyds, UBS, Credit Suisse and Deutsche Bank. Experts attribute the increased activity of European banks in the U.S. bond market with the Commission's proposal, released at the beginning of January. In particular, it wanted to see if a new banking crisis, banks, bondholders participated in their salvation through the forgiveness of the value of the securities. "The U.S. is outside the jurisdiction of European regulators, and released on bond there is such a restructuring would not be subjected to. In addition, outside Europe, investors are not so concerned about these initiatives, the European Commission ", - told RBC daily bond strategist at Julius Baer Marcus Allenspah. In addition, banks have become more active in attracting funds - they need to refinance debt, obtained at the peak of the crisis, often under government guarantees. "Most of these guarantees has been issued for a period of three years. They need new capital to replace these obligations, which is approaching maturity. Given that the debate over the new proposals regulators continues, it is easier to raise funds abroad ", - believes Mr. Allenspah. Another reason why the Europeans prefer to borrow in dollars - concerns about the crisis of sovereign debt in Europe. Analysts expect that European banks will be actively releasing "Yankee bonds" in the future. "We expect that the release of" Yankee bonds "will remain at a high level throughout the year. This is attractive in terms of currency swaps, and the needs of European financial services companies in the production of such securities are important ", - told RBC daily co-director of credit strategy departments in the United States Barclay Capital Jeff Meli. Source: bankir.ru