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For US Companies, Europe Is Hard to Resist: Credit Weekly
(Bloomberg) -- Companies are increasingly looking to Europe to raise money cheaply, a shift that is turning out to be a near-term positive for US corporate debt. The World's Data Center Capital Has Residents Surrounded An Abandoned Art-Deco Landmark in Buffalo Awaits Revival We Should All Be Biking Along the Beach Seeking Relief From Heat and Smog, Cities Follow the Wind San Francisco in Talks With Vanderbilt for Downtown Campus Verizon Communications Inc. this week sold €2 billion ($2.31 billion) of debt, its first deal in the European market since early 2024. Earlier in July, FedEx Corp. and PepsiCo Inc. both sold debt in the common currency, their first offerings there since 2021. US companies have sold €116.3 billion ($134 billion) of debt in Europe this year, known as reverse yankee issuance, just €4.4 billion shy of an annual record with about five months left in the year. Some corporations, like FedEx and PepsiCo, are just refinancing euro debt that's maturing, but the aggregate figure is higher with good reason: the European Central Bank is in active rate cutting mode amid muted inflation pressures, while the US hasn't cut rates since December. 'From an issuer's point of view, it's less expensive to borrow in euros,' said Gordon Shannon, a portfolio manager at TwentyFour Asset Management. The outlook for US rates in the coming months is getting hazier. A report on Friday said job growth slowed sharply over the past three months and the unemployment rate rose, signaling the labor market is shifting into a lower gear and giving the Federal Reserve more leeway to cut rates. US Treasury yields dropped, but to levels seen in early July. Even with Friday's market moves, borrowing in Europe remains cheaper. For borrowers that hedge, that dynamic may change in the coming days. Even so, over time the shift is probably toward more company bond sales in Europe, according to Hans Mikkelsen, US credit strategist at Toronto-Dominion Bank's TD Securities. As the US continues to impose more tariffs on other countries, including fresh levies announced on Thursday, foreign investors may have a 'natural tendency' to buy less US corporate bonds in favor of Euro-denominated corporate debt, Mikkelsen said in an interview. That decrease in demand will lead companies to seek out investors where they are. 'It's a bit of a long-term structural development where you'll see more US companies ease into those other markets,' Mikkelsen said in an interview. 'There will be less demand for US corporate bonds and more demand for non-US corporate bonds. US companies will have the same issuance needs. So they have to realize that they have to fund themselves more in other currencies.' In addition to US companies looking to borrow in euros, European companies are increasingly shying away from borrowing in dollars. In July, reverse yankee issuance was about $9 billion, compared with $3 billion on average for the month over the prior three years, according to Mikkelsen. European companies, on the other hand, borrowed a little more than $2 billion in dollars in July, compared with $13 billion a month on average for the prior three years. Those shifts toward European issuance go a long way toward explaining why US dollar bond sales fell short of Wall Street dealers' forecasts last month, Mikkelsen wrote. Dealers had forecast sales of around $100 billion for July, while actual sales were closer to about $81 billion, according to data compiled by Bloomberg News. In the near term, anything that reduces selling volume, known as a technical factor, could help keep spreads on US high-grade corporate bonds relatively tight. At the same time, demand, also a technical factor, remains strong globally, with cash gushing into credit funds. US company debt faces a series of pressures now, but valuations for much of the past week were at their strongest level of the year, with spreads at just 0.76 percentage point as of Thursday's close. 'If you take this overarching trend of net supply being down, banks issuing less because of regulatory reform expectations as was the case this past quarter and more US companies are issuing in Europe, all that does is further reinforce the positive technicals in the US market,' according to John Servidea, global co-head of investment-grade finance at JPMorgan Chase & Co. Week In Review US leveraged-loan issuance reached a fresh record in July, as junk-rated borrowers flocked to the market largely to reprice debt, saving companies millions in interest expenses. Deutsche Bank has seen its league table rankings drop in leveraged finance, to no. 8 from no. 1 in 2014. The bank has gotten tangled up in a series of difficult deals, and has faced internal and regulatory pressure to shrink the business, according to people familiar with the matter. Centerbridge Partners joined the ranks of many alternatives managers that see accessing 401(k) retirement funds as a logical next step for private credit firms. But while many are welcoming a future where 401(k) retirement vehicles have access to private investments, Sixth Street Partners' Co-Chief Investment Officer Josh Easterly is urging caution. Chinese developer Fantasia Holdings Group Co. plans to release a new restructuring plan in the coming weeks after previous attempts fizzled, underscoring the years-long struggle of builders to move past an unprecedented property crisis. In the US investment-grade bond market, Lazard Inc. sold $300 million of notes to refinance debt maturing in 2027, while Sherwin-Williams Co. sold $1.5 billion in three tranches. In Europe, UK utility Southern Water Ltd. sold the biggest sterling corporate bond in nearly 18 months as it seeks to shore up its finances, while General Motors Financial Co Inc. and Severn Trent sold impromptu euro debt offerings. Harley-Davidson Inc. said it plans to sell a nearly 10% stake in its finance unit along with more than $5 billion of retail loans to KKR & Co. and Pacific Investment Management Co. Bloomberg had previously reported that the firms were in advanced talks. Wall Street has a familiar gripe about the bots that now handle a growing share of trading in the corporate bond market: they are there to buy and sell your bonds, right up until you really need them. In periods of severe market stress, these computer-driven programs have historically struggled to keep up, forcing traders to turn them off. But in April, the algos showed signs of learning to stay online even when volatility spikes. A UK carpet firm that once supplied the British royal family has been scrambling for months to manage its looming debt maturities. It found a solution in an unlikely place: US distressed debt funds. EchoStar Corp., the broadband company that's missed debt payments, is being pushed by federal regulators to sell some of its airwaves to address concerns it has failed to put valuable slices of wireless spectrum to use. Legal software provider Dye & Durham Ltd. launched a review of strategic options, including a potential sale, in a bid to maximize shareholder value after reaching a truce with one of its largest investors. On the Move Oliver Thym, a partner at Thoma Bravo, is leaving the firm after more than five years as its most senior credit executive. Thym, who oversaw Thoma Bravo's credit funds and strategic debt investments, will transition out of his role by the end of this year as the firm adds Jeff Levin and Kunal Soni who previously worked at Morgan Stanley. Oaktree Capital Management hired two executives from Bain Capital and Intermediate Capital Group as it builds out its Europe direct lending business. Alessandro Nuti, who worked at Bain for over seven years, is joining as a managing director, while Kieran Thind is joining from Intermediate Capital as a senior vice president. CoBank recruited Aimee Evans as syndicate head of sales, capital markets. Evans previously worked at BMO Capital Markets as a managing director, and spent about a decade at Bank of the West before it was acquired by BMO. Sumitomo Mitsui Banking Corp.'s head of loan origination for East Asia, Hong Kong-based Wami Ha, is retiring after more than 30 years working in the banking sector. Separately, SMBC appointed former Morgan Stanley managing director Joy Kwek as head of capital markets and solutions for Asia Pacific — a newly created role based in Singapore. --With assistance from Tasos Vossos. How Podcast-Obsessed Tech Investors Made a New Media Industry Everyone Loves to Hate Wind Power. Scotland Found a Way to Make It Pay Off Russia Builds a New Web Around Kremlin's Handpicked Super App Cage-Free Eggs Are Booming in the US, Despite Cost and Trump's Efforts What's Really Behind Those Rosy GDP Numbers? ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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2 hours ago
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Wall Street internship season is ending. What to do if you don't get a return offer.
The summer is nearly over, and full-time job offers could start rolling out as soon as next week. Not every intern will get picked. What do you do if you don't get invited back? A banking recruiter and a top 10 business school professor on how to recover and stay in the game. Summer internships on Wall Street are coming to a close, which means college students who toiled late at the desk for weeks trying to impress the boss will soon know whether it worked. The number of investment banking interns who are invited to return after graduation to work full-time varies by year, by bank, and by group. This summer, many factors stand to shake up the return-offer rate: M&A has come soaring back after a slow start to 2025. At the same time, more banks are rolling out artificial intelligence tools that stand to impact junior banker jobs. "At this point it's too early to tell," said Steve Sibley, a business school professor whose undergrads intern on Wall Street each year. "I haven't heard from a lot of students, which is usually a sign they're not worried." With return offers right around the corner (summer analysts from two different banks told Business Insider that they expect to get the news as soon as next week), we decided to find out how to proceed if you don't get invited back. We asked Sibley, who has taught hundreds of students who have successfully broken into Wall Street over his 10 years of teaching at Indiana University's Kelley School of Business, along with Wall Street banking recruiter Meredith Dennes. They said that while a return offer is the surest path to a career in finance, not getting one doesn't necessarily mean your Wall Street dreams are over. You just have to act quickly and decisively. Here is their advice: Be honest with yourself The first step is to think about your strengths and weaknesses, and what others might have done to get an offer that you didn't. "Before making your next move, you need diagnostic clarity," said Dennes, founder of recruitment firm Prospect Rock Partners. "Your comeback strategy depends entirely on accurate self-assessment." Sibley said there tend to be three main reasons someone didn't get an offer: Your work product was off. "A lot of times interns will overextend themselves and try to be everything to everybody," he said, adding: "If someone asks you to do something and you don't have bandwidth but you say yes and your work is late as a result, that's problematic." The bank didn't see you as a cultural fit. If your bank has a "work hard, play hard" vibe and you prefer to spend what little free time you have relaxing in front of the TV, not getting the return offer at that firm is probably for the better, said Sibley. The bank may need fewer analysts than expected. Banks tend to hire interns two years in advance, which can lead to overhiring. Different divisions have different activity levels in any given year. M&A activity in your coverage group or at the bank generally may be lower than anticipated. Not getting a return offer can be a blessing in disguise, said Sibley. "It may feel like a rejection, but maybe it's an indication that investment banking isn't for you, so be open with yourself about that." Start networking, fast If you still want to pursue investment banking, you have options. The first is to find a spot at another firm as quickly as possible. Interns usually have about two weeks to accept or decline their offers, opening the door to job opportunities at firms that underhired or got more declines than planned. But you have to act fast. "Any additional seats come available very quickly and get filled quickly," said Sibley. To do that means reconnecting with the contacts you made when you were recruiting for your internship. "These relationships, properly maintained, often become your strongest advocates for future opportunities," Dennes said. This is key because when only one or two spots open, the bank will often try to fill them without an official job posting. The only way to know is through connections. Don't be picky, Sibley said — casting too narrow a net might leave you with nothing. "You probably aren't moving up the league table for your full time position," he said, adding: "So look down, maybe middle market, maybe it's less elite boutique banks — anything where you're learning skills for the job." Take responsibility When networking and talking with other potential employers, you will have to address why it didn't work out at the other firm. Dennes and Sibley said to own it — blaming anything other than yourself is a big red flag to other potential employers. "When addressing the no-offer in future interviews, lead with accountability and growth," said Dennes. "Show them you extracted value from the experience and applied those lessons systematically." Maybe you said yes to everybody, and your work suffered. Here's how Sibley suggested you might explain what happened and what you learned from it: I tried to accept every work stream that was sent my way, and as an intern, didn't have the courage to say I had enough on my plate and couldn't take on anything else. I learned there are things that are important and things that are urgent. I learned the importance of prioritizing certain things over others, and pushing back if my plate is overflowing. Pursue deal-adjacent jobs If you want to do M&A but don't get an investment banking job, there are adjacent careers where you can gain similar skills and make the move to banking down the line. You just want "anything where you are touching deals or deal advisory," said Sibley. Consider roles in corporate development at Fortune 500 companies, which will offer deals and modeling experience. Large consulting firms like Deloitte and KPMG also tend to have corporate finance teams that operate as investment banking arms of their firm. There are also business management consulting firms that specialize in things like restructuring and turnarounds. You should also consider valuation advisory teams or businesses. Some banks, for example, have valuation advisory practices that are separate from their investment bank but that work with the investment banking coverage groups. Consider a master's degree You could also buy yourself another year of recruiting by enrolling in a master's finance program (different from an MBA, which you could still do later). "It's a way to extend the runway," said Sibley, who is associate chair of IU's master of science in finance program. He said he has had students go this route at IU and land a job before. There are a lot of these one-year specialized programs at various universities today. Going to a different school than where you did undergrad is probably better, he said, so you can take advantage of a second alumni network. "It's easier to find a job from school than from your parents' basement," said Sibley. Read the original article on Business Insider
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2 hours ago
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Fed might've cut rates if the July jobs report had come first
A weaker-than-expected July jobs report could have justified a Federal Reserve interest rate cut had the data been available sooner. Brian Jacobsen, chief economist and strategist at Annex Wealth Management, says tariffs — not just high rates — are driving the hiring slowdown. He also notes that market volatility might persist until the Fed pivots. To watch more expert insights and analysis on the latest market action, check out more Morning Brief. Related videos Europe's most expensive city revealed, as living costs near £3,500 per month £50k in savings? Here's how to unlock up to £4.5k in passive income overnight How will the Lloyds share price be affected by today's Supreme Court ruling? Meet the 75p dividend stock with a higher yield than Legal & General shares Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
