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Allure of Cheap Borrowing Costs in Europe

U.S. companies are expected to issue more euro-denominated debt in 2015 than at any other time since 2007.

By Sally Bakewell and Cordell Eddings, Bloomberg | Updated on December 30, 2014

In 2015, U.S. companies are forecast to cross the Atlantic to raise funds in euros at the fastest pace in at least eight years, as borrowing costs in Europe fall below dollar rates by the most in a decade.

Apple Inc., Verizon Communications Inc., and Albemarle Corp. led 68 billion euros (US$83 billion) of bond issuance by American borrowers this year, the busiest since 2007 and 45 percent higher than 2013, according to data compiled by Bloomberg. The number will be surpassed next year as depressed funding costs endure, according to Barnaby Martin, a credit strategist at Bank of America Merrill Lynch, and Jens Vanbrabant, the lead money manager at London-based ECM Asset Management Ltd.

While Federal Reserve Chair Janet Yellen has set the stage for higher U.S. borrowing costs next year, European interest rates are predicted by economists to remain at record lows. As inflation in the region is poised to turn negative, momentum is building for the European Central Bank (ECB) to start a quantitative easing program of government bond purchases to boost growth.

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