More than a dozen lenders and debt bankers Bloomberg spoke to, most of whom asked to discuss business-sensitive information anonymously, said they were forced into a series of defensive actions amid many initially working to take Trump’s statements to be fully serious.
For example, when he issued about 200% European wine tariffs, many investment banks began to conduct outdated transactions at potentially affected companies below market prices to lead the crowd. This includes the bond between packaging expert Ardagh Group SA and Verallia, and Italian label maker Fedrigoni Spa.
But within a few days, the drop in these bond prices was completely removed because the threat was not real. When the tariffs were announced, no mention of wine was made.
It is not an isolated case when Trump negotiates through social media and “floods the area” with often contradictory information. According to three senior debt financiers, a bank and investor threat of imposing 50% tariffs on Canadian steel was also quickly abandoned. After all Trump legends, the “72-hour rule” has begun to be adopted, and they believe that if the ace at the time remained unchanged last month, his policy might actually appear. The brutal sell-off, especially in U.S. stocks and treasury, prompted him to pause for 90 days in all countries outside China, triggering a relief rally that helped to eliminate some, but not all, losses.
“We no longer act immediately because there is always a risk of reversal. I think we are immune to some of these risks.” Catherine Braganza, portfolio manager at Insight Investment, said that Europe’s junk bond market has almost completely recovered its worst route in years in early April.
BloombergCredit rebounds are bigger than other asset classes, but it is still impossible for a buyer of the company’s Debt to assume that this will be the case – as economists estimate a 45% chance induced by Trump next year, putting pressure on key sources of business investment.
S&P Global Ratings has even begun to add notes to many of its assessed borrowers’ credibility assessments, citing “highly unpredictable U.S. around policy implementation,” and warns that the result is “a great uncertainty in its baseline forecast.”
Begin early
In the non-US period, a pathway could be opened to survive the fluctuations in the field policy. In Europe, bankers are speeding up bond sales procedures to try to wrap details and be locked before Trump wakes up and starts publishing. And stay ahead of the volatile US market that is volatile in emotions.
“Everyone is keenly aware of the 24-hour headline risk, while the frequency in U.S. time increases,” said Matteo Benedetto, co-head of investment-grade groups at Morgan Stanley. “It's better to end a deal before the New York meeting begins.”
Irish telecom company Eircom Finance DAC announced the bond sale, held a call from investors and set the deal the same day, a rare event in the junk market. Higher viewership spectrum, the luxury Titan LVMH Moet Hennessy Louis Vuitton SE set a two-part deal of 1.9 billion euros ($2.15 billion) before 1pm local time, locking it in the U.S. market before it opens. For the Blue Chip giant, this usually does not guarantee urgency.
“We must consider the efficiency of market exposure and execution schedules and the efficiency of execution schedules and the efficiency of execution schedules and the execution schedules,” said James Cunniffe, head of the corporate and structured DEBT Capital Markets at HSBC Holdings;
With many companies running, from General Motors and Mercedes to McDonald's and Procter & Gamble, either withdraw earnings guidance or report lower sales, some debt investors are turning to non-cyclical day-to-day businesses that can better survive the lasting shift in U.S. tariffs. Braganza's company Insight is looking for anything from canned tomatto producers to mobile service providers.
“People don’t stop cooking because of tariffs, and they won’t get rid of their phones,” she said.
Others say buyers need to return to the basics by focusing on business fundamentals and core valuations, although it is easier said than done when supply chains are so intertwined. Pepsi has lowered its 2025 forecast and faces higher supply chain costs due to tariffs.
Fabiana Fedeli, global chief investment officer at M&G Investments, responded to Trump's post “more art than a science.”
