Why’s the ECB Buying the Debt of So Many Non-EU Companies?

“Companies from outside the euro zone are setting up companies or vehicles to issue debt in euros and thereby qualify for the ECB’s purchase programs.”

By Nick Corbishley, for WOLF STREET:

The European Central Bank has been hoovering up the corporate bonds of a growing number of multinational firms that are not based in the Eurozone or the EU. Those firms include the finance divisions of Swiss behemoths Nestlé and Novartis, US giants Coca Cola and John Deere and UK-based British American Tobacco and WPP. It also includes the Hong Kong-based, Cayman Islands-registered conglomerate CK Hutchison Group.

How easy is it for large non-EU firms to qualify for the ECB’s corporate bond buying scheme — known officially as the Corporate Sector Purchase Program (CSPP)? As the Spanish financial daily Cinco Dias reports, all you need to qualify is:

  • An investment grade credit rating. The ECB still refuses to buy junk-rated bonds. But as it says, that could change at any time.
  • A subsidiary based in a Euro-Area country, usually one where you pay next to nothing in corporate taxes, such as Luxembourg and the Netherlands.
  • To issue bonds in euros. More and more companies are now doing this, lured by the promise of virtually free ECB money.

€224 Billion and Counting

The ECB has been buying up corporate bonds of investment-grade companies in Europe for just over four years, now amounting to €224 billion. That doesn’t include the €35 billion of additional corporate bonds the ECB has bought as part of its pandemic emergency purchase program (PEPP).

The biggest beneficiaries of the ECB’s bond buying have been (in descending order) French, German, Italian, Spanish and Dutch firms in the energy, infrastructure, telecommunications and automotive sectors. Foreign subsidiaries of huge non-EU corporations are also eligible and have been since day one, as long as they meet the aforementioned three criteria.

What is new is the fact that many global companies are hungrier than ever for virtually free central bank money. And they’re shopping around for it.

“Companies from outside the euro zone are setting up companies or vehicles to issue debt in euros and thereby qualify for the ECB’s purchase programs,” says Fernando García, Capital Markets director at Société Générale. “Some US companies have already done it. Although the Fed has similar purchase programs on offer, they prefer to have all options on the table, so as to get the best prices.”

Quid Pro Quo.

The Fed is responding in kind by buying up dollar-denominated bonds issued by a handful of U.S. subsidiaries of some of Europe’s biggest firms. They include Nestle, which is simultaneously tapping funds from the ECB, the Fed, and the Swiss National Bank. Indeed, the 15 biggest beneficiaries of the Fed’s corporate bond buying program include four European corporations — Daimler, Volkswagen, BMW and BP.

The ECB does not divulge amounts of specific purchases, but it does divulge how many times it has bought a particular company’s bonds. Here are some of the non-EU firms that have thus far taken advantage of the ECB’s CSPP and the number of times they’ve benefited:

  • Swiss food and drink conglomerate Nestlé, whose bonds have been bought by the ECB an impressive 12 times, making it one of the biggest beneficiaries of the entire bond-buying program.
  • Swiss pharmaceutical Novartis (9 times).
  • US agribusiness giant John Deere (6 times).
  • Coca Cola (4 times).
  • CK Hutchison Group (4 times). This Hong Kong-based Cayman Islands-registered conglomerate with some subsidiaries in Europe has no problems qualifying for the ECB’s bond buying program.
  • Upjohn Finance, a subsidiary of US pharmaceutical company Pfizer.
  • Switzerland-based pharmaceutical company Roche (3 times).
  • Richemont, a Switzerland-based luxury goods holding company founded by South African businessman Johann Rupert (3 times)
  • U.S. home appliance manufacturer Whirlpool (twice).
  • UK-based British American Tobacco (twice).
  • U.S. truck maker Paccar, which owns Dutch truck maker DAF (twice).
  • The finance division of U.S. energy firm Schlumberger (twice).
  • U.S. confectionery Mondelez (once).
  • British contract food service company Compass (once).

The Bank of England is another major central bank that has gone out of its way to help out overseas companies. Its Coronavirus Corporate Financing Facility (CCFF) is available not only to British firms but to any firm that is deemed to provide “a material contribution to the UK economy,” which can mean just about anything. Of the 61 businesses that still have an outstanding balance with the central bank, roughly two-fifths are based overseas.

The program’s biggest beneficiaries of the BOE’s program are:

  • German chemicals giant BASF, which was given a loan of £1 billion.
  • German chemicals giant Bayer, infamous for having acquired Monsanto to then get swamped by Monsanto’s horrendous litigation, received £600 million in loans.
  • Chanel (£600 million).
  • US Cruise ship operator Carnival — a company with hefty fixed costs and collapsed revenues, which, like all major U.S. cruise liners, does not currently qualify for U.S. bailout money because it is incorporated, for tax reasons, in Panama. But what it can’t get from the U.S. it can pick up from foreign central banks.
  • Australian shopping mall owner Westfield (£600 million).
  • Johnson Controls, a US company that became an Irish company in 2016 via inversion after its merger with Tyco to avoid paying US income taxes.

Winners and Losers.

So far, these central bank programs have had their desired effect. After falling sharply in March, global bond issuance has bounced back in a big way. U.S. investment-grade corporations have already issued more debt year-to-date than they did in the whole of 2019, according to S&P Global Ratings. These companies, together with their European counterparts, are the biggest beneficiaries of the central banks’ bond buying, thanks to which they have been able to issue bonds at prices that would have been unthinkable just four months ago.

Many of these companies are going through serious difficulties right now. But thanks to central bank support, they can service their expenses in the face of the abrupt decline in their revenues much more comfortably than companies that can’t issue bonds and have them bought at face value in the midst of the worst crisis in decades by one or more central banks. This puts the eligible companies in a far stronger position to weather the storm, and pick up the pieces of smaller companies along the way. In this sense, the central banks are picking the winners and losers. By Nick Corbishley, for WOLF STREET.

Foreign investors are fleeing Turkey, worried about surging inflation, deeply negative real interest rates, and a central bank unwilling to crack down on inflation. Read… Turkey in 2nd Currency Crisis in 2 Years. Lira Hits Record Low

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  42 comments for “Why’s the ECB Buying the Debt of So Many Non-EU Companies?

  1. doug says:

    ‘Creative destruction’ has been taken out back and killed; now a quaint notion of the past.

    • Wisdom Seeker says:

      This is “destructive creation” – feeding central bank print-money to the world’s largest and best-connected companies, giving them a huge financial advantage over smaller startups. A license to stifle competition.

      Meanwhile, the central banks aren’t buying as investors, no profit required, just warehousing of corporate and state debts.

      “I come not to buy these bonds,” Lagarde might say, “but to bury them.”

      • sunny129 says:

        Read if you can an (long) article titled ‘RESCUING RUINING CAPITALISM’ by MS analyst Mr. Ruchir Sharma at WSJ (July 24th) very analytical and indicting article against the Fed!

      • Clay says:

        LOL at destructive creation and what Lagarde might say. Gold.

        “Oh judgment thou art fled to brutish beasts, and men have lost their reason”

  2. MiTurn says:


    I always look forward to your postings on Wolfstreet!

    “Companies from outside the euro zone are setting up companies or vehicles to issue debt in euros and thereby qualify for the ECB’s purchase programs.”

    This is stunning. I can’t get my head around this. How is this going to ‘save’ the Euro Zone? Is this meant to save jobs?

    • pbfurn says:

      No, but it is designed to enrich the few at the expense of many.

    • Raymond Rogers says:

      It shouldn’t be surprising given that the Swiss created money out of thin air and bought US stocks years ago. I wouldn’t be surprised if this was still happening.

      After that nothing suprise me.

      Gold closed over 2K today.

      • Roger says:

        Incredible,,, The economy just get crazyer and crazyer,,,keep everything in silver/gold

        • TimTim says:

          Hmmm, till the smash comes.

          Then wait some..

          And only then, buy some more, perhaps…

          Gold appears to be, to governments and central banks, like the old adage of buying and running a yacht:

          ‘It’s like standing in a cold shower tearing up $100 dollar bills, lots of them’

          They will fight back. Perhaps they have been doing so for some time.

        • sunny129 says:


          ’till the smash comes’

          I can see that there are many out there, waiting for that moment!
          But Mr. Mkt NEVER accomodates the majority, by history!

          That’s why gold trade options with some hedges but biased to long! More Trillions of green coming!

        • happy_man says:

          not trillions, quintillions

    • cas127 says:


      Perhaps the true primary goal of CB money printing (manifested in multiple ways, including wholly risk insensitive bond buying by the CB) is to keep/expand the ambit of a given currency because fiat currency is the locus, the true daily lever of political and economic control.

      The more parties (domestic or not) utilizing a given currency (US borrowers in Euros, get *Euros* as loan proceeds), the more control/influence a CB has over a wider array of physically productive assets (because those true assets are now linked to the CB’s infinitely issue-able fiat paper).

      Imagine a sociopath running a Monopoly game as Banker.

      The power to cheat as Banker (by creating game fiat at will, ignoring the “rules”) is the power to wholly (If imprecisely) control the outcome of the game.

      At least until the other players awake to the fact that, “The only way to win is not to play.”

      • Beardawg says:

        Cas 127

        It would seem the only way to win is TO play ??

        Unless….you are implying the only way to escape nationalization of your biz is to not accept the free $$$ ???

        • Cas127 says:

          A system rooted in systemic, perpetual fraud is going to inevitably fail.

          Herding more and more people into the game playing will only collapse the system faster.

  3. stan6565 says:


    Great snapshot in real time of how the crony capitalism works.

    Not only banks any more, but any firm big enough to finance a targeted penetration into the government apparatus, gets to get its existence underwritten by the taxpayers.

    Then, the taxpayers, or those that produce wealth for their respective countries, get fekked from both ends. The entitled parasites from the top, and the downtrodden unemployed desperate “despicable” from the bottom.

    • Ian says:

      Not just their existence, that would at least add a crumb of reasoning to it. By what measure is Novartis struggling? Or any pharmaceutical, by definition a must have in any portfolio due to their stability in good and bad times. Nestle? Struggling? I doubt it. As stated elsewhere, simply an excuse to enrich a few at the expense of the many.

    • Stephen C. says:

      Someone famous once said, “It works until you run out of other people’s money.” Or something like that.

      Funny how rich people actually love socialism. But only the kind that works for themselves.

  4. Putin on the Ritz says:

    Wow! An excellent article. For some strange reason, I haven’t heard about the fact that the BoE are buying the debts of Carnival in the British media. They really are now starting to get desperate in keeping the show on the road.

  5. 2banana says:

    Big businesses love big government.

    The uber rich love big government.

    The bigger, the better.


    They control it.

    And use it to destroy the competition.

    “This puts the eligible companies in a far stronger position to weather the storm, and pick up the pieces of smaller companies along the way.”

  6. sunny129 says:

    ‘How is this going to ‘save’ the Euro Zone?’

    It is their survival NBOT eurozone!

    Those companies will suck as they can from ECB, until cannot!
    Socialize the DEBT and privatize the Profit!

  7. sunny129 says:

    BY providing Dollar swaps to all other Central Banks including ECB, the FED has become the World’s ( Bailout) Central Bank!

    From Bailing out the Nation onto bailing out the World!
    A giant PONZI scheme !

    Gold over $2000 and climbing!

  8. TimTim says:


    My apologies for a badly expressed question from your article about the Turkish Lira. I should have framed my question around how the current depreciation of the Lira might have current effects on certain european banks. I was not thinking Spanish banks at this time, more French.

    I hope you guys are still ok in northern Spain.

    For this article, I guess the question is ( reaching into the minds of people I don’t know) ‘Where in the future do you expect our fiends to come from?’

    I don’t know. Answers on a postcard.

    • TimTim says:

      Freudian slip, fiends being the most accurate, but what I meant to say was friends.

  9. Old School says:

    Stocks at all time high
    Gold at all time high
    Treasury Bonds at all time high (lowest yield)
    Fed government spending 2x revenues
    Gasoline at $170/gallon, Tesla stock $1400.

    Too difficult for me to figure out, except I am not buying anything at highest price ever.

    • lenert says:

      You aren’t the only one – velocity of M1 and M2 have fallen off a cliff despite their levels going parabolic.

  10. Prof. Emeritus says:

    This list is not full, there are more benefiting non-EU companies, such as:
    ABB (Swiss electro)
    Adecco (Swiss business)
    Bunge (US agri)
    Caterpillar (US machine)
    Eaton (US electro)
    Geberit (Swiss households)
    Liberty Mutual (US insurance)
    PartnerRe (Bermuda insurance -> complicated)
    Urenco (UK gov. owned nuclear guys -> very very complicated)
    …etc., these are the more well-known ones I found in my old spreadsheet (credit goes to Unicredit’s research arm)

    Brit-Dutch corporations such as Shell or Unilever are headquartered in the UK, so legally they do not qualify as Eurozone companies, but it’s hardly debatable they are technically part of it. Same applies to Fiat-FCA. And I think that’s the case with 99% of these bonds: this is money invested in the Eurozone, which transfer pricing documentations would likely prove, so it’s free money only for those who spend it here.

  11. The rate on these must be better than their own negative yield debt. They buy one of these and sell one of their own. So long as the volume doesn’t lead investors to question whether they are buying corporate bonds at sovereign prices. Makes you wonder why Powell and the independent Fed don’t say no to Mnuchin’s no revenue toilet paper, and instruct Blackrock to use SPV to load up on Proctor and Gamble bonds? (Charmin) With ten times leverage who needs that much collateral?

  12. Clarke Acton says:

    with all the cash sloshing around these companies after they gorge on central bank debt this chart is going to go parabolic


  13. Dave says:

    If they qualify, Chinese multi-nationals with European subsidiaries should take advantage of the program. That would be funny!

  14. Petunia says:

    Louie Vuitton got money to buy Tiffany’s as well, a few months back.

    Now if only they would give me a mortgage to buy a Chanel handbag.

  15. sunny129 says:

    Why’s the ECB Buying the Debt of So Many Non-EU Companies?

    Why NOT? Who is objecting? Bundes bank?
    No one is challenging or demanding accountability just like here with our FED! Full party on the swing!
    BAILOUT festival all over!!

  16. MCH says:


    at the risk of offering unwanted advice… as if that’ll stop me.

    I suggest you open up a branch in the EU, and sell bonds there. And if Nick does the same, you guys can really clean up.

    Wolf Street bond denominated in Euros, pays a negative 0.5% interest rate, and then will have the entire sum repaid in 100 years. It’s a frigging awesome deal, and the best part, you’re in a safe jurisdiction, not getting the bonds from shady sources known to default periodically, like… Argentinian government

  17. Willy Winky says:

    This has nothing to do with crony capitalism, fascism or enriching the elites.

    This has everything to do with total desperation.

    Without the CBs stepping in here to pretty much hand these massive TBTF corporations billions upon billions, these TBTF corporations would all implode.

    Massive numbers of people would be out of work – there would be a financial crisis — and many products and services that are critical to the operation of BAU – would not be available.

    This is what banks do when faced with an existential crisis — they have no choice but to keep pumping in good money after bad.

    Obviously this will end in tears (and far worse). This is what is proverbially known as the end of the line.

  18. Engin-ear says:

    This central banks’ lending is a desperate time-buying move to avoid the simultaneous collapse of too many companies.

    The useful idea I see behind : spread the global problem of cash shortage over several years (instead of months) to make it a little bit more manageable.

    Still this is a time-buying : more debt with less revenues destroys the solvency and finally the capacity to survive.

  19. Shtirliz says:

    I would love it if some con artists defrauded the ECB with this bond-buying program and then Martin Scorsese or Adam McKay made a movie about it.

  20. joe2 says:

    Geez, I forgot the definition of fascism, and it seems so has the EU. I must look it up when I have the time.

  21. Rodney says:

    Does this mean the ownership has now passed into the banksters hands as planned all along, yet more control of big business into fewer hands.
    More asset transfer and wealth pushed upwards only?

Comments are closed.