General Electric Co., Philip Morris International Inc. and McDonald's Corp.'s borrowing costs are verging on negative in Europe as European Central Bank quantitative easing drives yields to record lows.
The euro securities are among the first corporate bonds sold by U.S. issuers with rates quoted at less than 0.5 percent, according to data compiled by Bloomberg. General Electric's 700 million euros ($798 million) of 5.125 percent notes due in September reached a record-low yield of 0.079 percent on Feb. 10 and are now at 0.081 percent, the data show.
U.S. companies are raising capital in euros as the prospect of large-scale ECB bond purchases drives down borrowing costs in the euro region while the Federal Reserve considers increasing interest rates. American firms have issued 11.65 billion euros of bonds in 2015, the busiest start to a year since 2008, according to Bloomberg data.
Recommended For You
"It's clearly the financial repression that's being forced on investors through QE," said Geraud Charpin, a London-based money manager at BlueBay Asset Management, which oversees more than $65.8 billion. "You probably have to go beyond five years to get a positive yield in a big chunk of the euro government bond market. For U.S. companies with earnings in euros, it's a no-brainer because the yields are super low."
New York-based Philip Morris, the world's largest publicly traded tobacco company, has 750 million euros of 5.875 percent bonds due September that yield 0.152 percent. Notes due in June 2016 issued by McDonald's, the world's largest restaurant chain, yield 0.165 percent, according to Bloomberg data.
"It gives them a material buffer if there were to be a downturn in the future because their cost of funding would be so incredibly low," said Jonathan Pitkanen, the London-based head of investment-grade credit research at Threadneedle Asset Management Ltd., which oversees 92.6 billion pounds ($142 billion).
An official at Philip Morris's media office in Lausanne, Switzerland declined to comment on the company's bonds when contacted by phone. An e-mail to McDonald's press department wasn't returned and no one in the office could be reached by phone. Seth Martin, a New York-based spokesman for GE, declined to comment by phone.
Euro-priced borrowing costs are not the only ones that are falling. Yields on some of the companies' Swiss-franc denominated securities turned negative in January after the Swiss National Bank cut the rate it charges commercial banks to park cash with it to minus 0.75 percent from minus 0.25 percent.
Of General Electric's 10 Swiss-franc bonds, seven yield less than zero, with its 625 million francs ($671 million) of 2.25 percent notes due December 2016 yielding minus 0.259 percent, according to Bloomberg data. Philip Morris's 325 million francs of notes due December 2016 yield minus 0.04 and McDonald's 250 million francs of 1.875 percent notes due June 2016 yield minus 0.076 percent.
Bloomberg News
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
