AT&T’s €4.1 billion + £550 million deal is an example of the arbitrage currently available to many US issuers – to issue in euros/sterling and swap back to USD – while adding issuance capacity by tapping non-USD investors.
The deal
€4.1 billion in euros – across 4 tranches: 4, 8, 12 and 19 years.
£550 million in sterling – 26 years.
Totalling €4.7 billion equivalent (USD 5.4 billion).
Ratings: Baa2/BBB/BBB+ (Moody’s/S&P/Fitch).
Pricing date: 27th July 2026.
Bookrunners: Barclays, Citi, Goldman Sachs, Wells Fargo.
Pricing
For the euro tranches – MS + 65bps for the 2030s (3.65% yield), 110bps for the 2034s (4.19%), 135bps for the 2038s (4.57%), and 175bps for the 2045s (5.07%).
For the sterling tranche – Gilts + 140bps (7.07%) for the 2052s.
Benefits for AT&T
AT&T locks in low cost funding – taking advantage of low credit spreads in Europe and a favourably priced cross-currency swap.
They were able to lock in long-term capital – up to 19 years in euros and up to 26 years in sterling.
European investors are familiar with AT&T and have strong appetite to add this diversification to their portfolios. Pension funds and insurance companies provide a strong demand source in Europe for long maturities.
This deal also helps grow AT&T’s total borrowing capacity. It keeps their USD powder dry – improving their ability to issue in USD markets. It also increases European investors’ familiarity with the credit – allowing AT&T to continue to come back to the euro and sterling markets.
Reverse Yankee
Bonds issued by US borrowers in foreign currency are referred to as Reverse Yankee deals.
There have been over $130 billion of these deals so far this year.
Reverse Yankees are popular among US hyperscalers/large tech (working to diversify to raise funds for their massive capex plans), banks, telecoms, industrials, and consumer/healthcare.
AT&T is returning capital to shareholders
AT&T is running a large share repurchase program – with close to $20 billion of expected distribution to shareholders – across share repurchases and dividends (large relative to its $160 billion total market capitalisation).
As a mature, capital-intense business, reducing interest costs on debt can materially improve AT&T’s profitability.
A large transaction for late July in Europe
This transaction is large for the summer holiday period in Europe. It demonstrates the ability to get well-liked credits done in size during this period.
The deal tightened by 25bps to 30bps for the euro tranches and 10bps for the sterling tranche from initial price talk – pointing to no difficulty in getting the deal done.
Opportunity for other US issuers
There is an opportunity for many US issuers to reduce costs, lock in long-term funds, and diversify funding sources by raising in euros and sterling. It is worth doing the maths to see if the foreign funding costs + total swap costs (including collateralisation costs/risk) beat your domestic funding costs.
Moving first might have value – if European investors start to find they are holding too much new US corporate credit as the year progresses and more US borrowers issue in the European markets.
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