U.S. Companies Flock to Europe for Cheaper Debt Amid ECB Rate Cuts

American corporations are increasingly turning to European markets to capitalize on lower borrowing costs as the European Central Bank (ECB) cuts interest rates ahead of the Federal Reserve. Verizon Communications Inc. led the charge this week with a €2 billion ($2.31 billion) euro-denominated bond sale, its first in the region since early 2024. FedEx Corp. and PepsiCo Inc. similarly tapped the euro market in July for the first time in three years.

The trend is far from isolated. U.S. firms have raised €116.3 billion ($134 billion) in Europe so far this year—just €4.4 billion shy of the annual record—with five months remaining in 2025. While some issuers like FedEx are refinancing maturing debt, the surge primarily reflects the transatlantic rate divergence. "From an issuer’s point of view, it’s less expensive to borrow in euros," noted Gordon Shannon of TwentyFour Asset Management.

Recent U.S. labor market softening has clouded the Fed's rate path, with Treasury yields dipping slightly after Friday's jobs data. Yet the ECB's proactive easing continues to lure dollar-based borrowers across the Atlantic.