Module III· DCM — High Yield & HybridAdvanced
Question
How does cross-currency HY pricing work: when does a DACH issuer issue in USD versus EUR?
Answer
Logic
The US HY market is deeper than the EUR HY market, so large issuers may access USD for size, liquidity, and investor diversification.
USD advantages
- Larger investor base
- Larger possible deal size
- Potentially tighter headline pricing for some credits
USD disadvantages
- FX risk must be hedged, usually with cross-currency swaps.
- 144A disclosure and documentation can be heavier.
- All-in EUR cost may be worse after hedge cost.
Decision rule
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All-in EUR cost of USD issuance = USD coupon + cross-currency swap cost +/- basis impact
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Compare that with direct EUR issuance cost.
Pitch tip
DACH mid-cap HY issuers often stay EUR-only. Large-cap or frequent issuers may use dual-currency tranches to access deeper demand.