Illinois Tool Works Joins U.S. Borrowers in Selling Euro Bonds

Illinois Tool Works Inc. sold 1 billion euros ($1.11 billion) of bonds, the latest borrower to venture to Europe where lower borrowing costs are fueling record issuance by U.S. companies.

The maker of equipment for deep-sea oil rigs, aerospace technology and wind turbines, sold 500 million euros each of eight-year and 15-year notes, according to data compiled by Bloomberg.

U.S. companies from McDonald’s Corp. to BlackRock Inc. are taking advantage of lower borrowing costs in the euro region, with average yields on investment-grade bonds in euros almost two percentage points lower than those in dollars, according to Bank of America Merrill Lynch index data. American borrowers have sold 52.6 billion euros of notes this year, more than double the 23.5 billion euros in the same period of 2014, data compiled by Bloomberg show.

Officials at Illinois Tool Works weren’t immediately able to comment on the sale when contacted by phone.

The Glenview, Illinois-based manufacturer’s bonds due in 2023 pay 62 basis points above benchmark rates, while those maturing in 2030 carry a yield premium of 100 basis points, according to data compiled by Bloomberg. 

The average spread over benchmark rates that investors demand to hold investment-grade debt in euros is 68 basis points, according to Bank of America Merrill Lynch indexes.


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