What is a Yankee market?


What is a Yankee market?

The Yankee market is a slang term for the stock market in the United States.

The Yankee Market is generally used by non-U.S. Residents and refers to the slang term for an American, a Yankee (or Yankee), which is sometimes used as a playful, if sometimes derogatory, reference to American citizens.

Understanding the Yankee market

The term Yankee market was used in business lingo, but has become widely accepted, just as “bulldog market” refers to the UK market and “samurai market” refers to the Japanese market.

Relatedly, a Yankee bond is one that is issued by a foreign bank or company but is traded in the United States and is priced in US dollars.

Special circumstances

Yankee bonds are often issued in tranches, defined as individual parts of a larger debt offering or financing arrangement. Tranches may vary with respect to risk levels, interest rates, and maturities.

The offers can be quite large, reaching up to a billion dollars. There are strict regulations in the US for the issuance of these bonds, resulting in a slow sale process: it can take more than three months for a Yankee bond issue to be approved, during which time a credit rating agency Debt assesses the creditworthiness of the issuer.

Reverse Yankee Market and Reverse Yankee Bonds

A reverse Yankee market and a reverse Yankee bond refer to US companies that participate in the European bond market. It is increasingly common to see US companies issuing debt in Europe.

The reverse Yankee market is reported to have reached 380 billion euros.

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In 2017, The Financial Times reported in the Yankee reverse market, as detailed by General Electric (GE) selling an € 8 billion bond and collecting € 22 billion in orders, a deal the Financial Times calls “one of the largest deals in history in the US. single currency, showing depth of demand for long-term issues from US borrowers. ”

The article describes the so-called Yankee reverse deals that are becoming increasingly popular, illustrated by large US issuers like Pfizer and Coca-Cola raising multi-million dollar deals.

In 2015, Coca-Cola raised € 8.5 billion in five tranches, which at the time was Yankee’s largest reverse deal. The GE sale surpassed that as “the fourth largest euro corporate bond sale in history” and possibly worked to strengthen future interest in reverse Yankee deals by major US companies.

Allergan and Baxter International, the Financial Times reported, were examples of two companies that announced investor meetings in Europe ahead of planned bond sales in 2017.

Bloomberg reported that US companies in 2017 borrowed € 57 billion in Europe, compared to € 42 billion in the same period in 2016. The companies involved in these Yankees reverse deals included heavy hitters such as Kimberly Clark, GM Financial, Nestlé , AT&T, Apple, IBM, Kellogg, Procter & Gamble, Netflix, Aramark, AMC Entertainment, Levi Strauss, and American Honda.

www.investopedia.com

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Mark Holland

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