The Yankee Market: What is it?
The American stock market is called the “Yankee market” colloquially. The term “Yankee market,” primarily used by non-Americans, alludes to the joking but occasionally derogatory nickname for an American, “Yankee.”
Comprehending the Expression “Yankee Market”
Like the terms “bulldog market” for the U.K. market and “samurai market” for the Japanese market, the word “Yankee market” originated in business jargon but has now gained widespread use.
Similarly, a Yankee bond is a bond that a foreign bank or company issues and trades on the American market.
Certain Situations
Yankee bonds are often offered in tranches, with smaller amounts provided as part of a more significant debt offering or financing package. Tranches might differ regarding interest rates, maturities, and risk profiles.
Offerings have the potential to reach $1 billion in size. The issue of these bonds is subject to stringent U.S. laws, which cause the selling process to move slowly. The approval process for a Yankee bond issuance may take more than three months, during which a debt-rating agency assesses the issuer’s creditworthiness.
Reverse Bonds and Reverse Yankee Market
US corporations that participate in the Eurobond market are referred to as having a reverse Yankee market or reverse Yankee bond. American businesses are frequently seen incurring debt in Europe.
It is said that the reverse Yankee market has grown to €380 billion.
The Financial Times detailed General Electric’s (G.E.) sale of a €8 billion bond and the €22 billion in orders it received in 2017, reporting on the reverse Yankee market. The Financial Times refers to this transaction as “one of the largest ever deals in the single currency, showing the depth of demand for long-dated issuance from U.S. borrowers.”
The article highlights the growing popularity of reverse Yankee transactions, using the example of multibillion-euro investments raised by major American issuers like Pfizer and Coca-Cola. In 2015, Coca-Cola completed the most significant reverse Yankee transaction, raising €8.5 billion in five tranches. The G.E. sale exceeded that, ranking as “the fourth-largest euro corporate bond sale ever.” It may have contributed to a rise in interest in reverse Yankee sales by significant American companies in the future.
According to the Financial Times, two businesses that announced investor meetings in Europe ahead of scheduled bond offerings in 2017 were Allergan and Baxter International.
According to Bloomberg, US corporations borrowed 57 billion euros from Europe in 2017, up from 42 billion euros during the same time in 2016.
Prominent corporations, including Kimberly Clark, GM Financial, Nestle, AT&T, Apple, IBM, Kellogg, Procter & Gamble, Netflix, Aramark, AMC Entertainment, Levi Strauss, and American Honda, were among the companies participating in these reverse Yankee transactions.
Conclusion
- The American stock market is called the “Yankee market” colloquially.
- Similarly, a Yankee bond is a bond that a foreign bank or company issues and trades on the American market.
- S. corporations that participate in the Eurobond market are referred to as having a reverse Yankee market or reverse Yankee bond.
