Raising money in Euro bonds go rampant across globe

Investors and companies across world are flocking to raise money through Euro bonds as European Central Bank's asset purchase programme have pushed the yields to record low across Euro zone.

What is the logic?

• Raise money in Euro bonds. Covert into local currencies. Euro falls through repayment period and one has to repay less in local currency.
• Due to actions by the central bank, the interest rate is very low. So, lower coupon payments look very attractive.

Global interests -

• Recent commentary suggests that Billionaire Warrant Buffet's Berkshire Hathaway is considering raising money through Euro bonds. This could prompt a chase by lot many followers. Logic is that Mr. Buffet is a knowledgeable and cautious investor and if he sees value in that then it must be good.

• However, lot many companies are jumping the gun ahead of Mr. Buffet namely in China. Chinese companies from mainland have raised money through Euro bonds worth $ 2.9 billion so far this year, compared to $ 3.3 billion for the whole 2014 according to Dealogic and Financial times. In last six months Euro has dropped nearly 13% against Yuan.

• Beijing-based State borrowed €1bn in January. Another euro bond issuer, Fosun International, raised € 0.94 billion last month.

• Companies from India, South Korea and Hong Kong have also turned to euro debt recently as interest rates are about to rise in US.

• Lots of US companies has recently issued debt in euros, including Whirlpool, Kellogg and Coca-Cola.

• According to Dealogic, 15 non-financial US companies have jointly issued a total of $21.7 billion of Euro bonds. Level is thrice that of 2014.

Euro that is currently trading at 1.088, expected to stay a funding currency for the time being.