BlackRock Inc. is preparing to sell euro-denominated bonds for the first time, joining a wave of U.S. corporates that have already taken advantage of rock-bottom borrowing costs in the region, thanks to the European Central Bank's massive quantitative-easing program.
The New York-based fund manager, which has close to $5 trillion in assets under management, met with investors in several European cities last week, and started marketing the new bonds in early European trade on Tuesday, according to bankers involved in the transaction.
It plans to announce the final terms of the deal later in the session and hopes to raise at least EUR500 million ($544 million), according to the bankers. The bonds have a maturity of 10 years and bankers are marketing them with an implied yield of just below 1.4%.
Last month, the ECB launched a huge bond-purchase program under which it has pledged to buy up to EUR60 billion a month in top-quality bonds to fuel economic growth by pumping money into the region's financial system.
Investors have piled into European debt in anticipation of bond prices surging as a result of the additional demand, pushing yields on many government bonds below zero and on corporate bonds to just a handful of basis points.
Yields fall as bond prices rise.
This year has already seen global companies like Berkshire Hathaway Inc., Coca-Cola Co., Mondelez International Inc. and Kellogg Co. come to the euro bond market to make the most of this cheap funding opportunity.
"In our view, once the earnings season subsides on the other side of the Atlantic, we are very likely to see another wave of U.S. issuers test the euro markets," Societe Generale credit strategists wrote in a recent note.
According to Dealogic data, close to EUR29 billion worth of euro bonds have been sold by U.S. corporates so far in 2015, more than at this point during any previous year, and on track to beat last year's full-year figure of EUR38.6 billion.
Societe Generale added that it expects bond issuance in euros to hit an all-time high this year, largely due to the wave of non-European issuers choosing to do transactions in the bloc's single currency. They said that after years of dominating the euro capital markets, France has already this year been replaced as the most active jurisdiction by the U.S., in terms of bonds issued in euros, representing 22.3% of all issuance so far in 2015.
BlackRock, which is rated A1 by Moody's and AA- by Standard & Poor's, has issued bonds in the U.S. dollar market in the past but has never publicly ventured into the euro market for funding.
Earlier in April, it reported earnings of $822 million, or $4.84 a share for the first quarter of 2015, up from $756 million, or $4.40 a share, in the same period a year before. Barclays, Citigroup and J.P. Morgan are arranging Tuesday's bond issue.
Write to Josie Cox at josie.cox@wsj.com
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(END) Dow Jones Newswires
April 28, 2015 05:05 ET (09:05 GMT)
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