Asia ramps up euro borrowing as US funding advantage fades under Trump
Asian economies are not merely altering their trading relationships to counter US tariffs; they are also progressively redirecting their financing to alternative markets. This shift highlights the potential erosion of American dominance in capital raising as a consequence of President Donald Trump’s policies. According to data, Asia Pacific borrowers have raised euro-denominated issuance to a record 23 percent of the total across both currencies this year, marking an increase of six percentage points from 2024. In 2025, Euro note sales by companies and governments experienced a significant increase of 75 per cent, reaching €86.4 billion ($100.7 billion). Data revealed that several Asian deals were ranked as the most oversubscribed in Europe’s publicly syndicated debt market during their launch week. The majority of financing deals continue to be conducted in US dollars, with borrowing in the greenback increasing by 29 percent among Asian issuers this year. However, the market share has decreased, and the American advantage in funding may be gradually diminishing.
“A key driver is the need to diversify away from US dollar concentration,” stated Daniel Kim. “This year’s surge in euro-denominated bond issuance stems from a confluence of strategic motives that go beyond the routine refinancing.” The trade actions taken by US President Trump this year, along with his insistence on the Federal Reserve to lower interest rates despite inflation worries, have unsettled investors’ faith in the dollar’s dominance, leading them to favor euro assets. Asian borrowers have responded accordingly, as euro bond issuance has surged to satisfy the demand for diversification, while the dollar has declined by 11 percent against the euro. “De-dollarization or diversification of investment portfolios to have more deployment in non-dollar currencies is a theme we have witnessed this year,” said Ben Wang. The euro represented a reduced share of Deutsche Bank’s APAC bond trading volume at the start of the year, but it accounted for “more than 10 per cent, even 20 per cent” as the second half commenced, he stated. The boom is also being propelled by reduced funding costs, as certain Asian borrowers find it more economical to raise capital in euros compared to dollars or their local currencies.
According to data, the premium that investors pay to swap euros into dollars has reached a near five-year low of 3.1 basis points. Critics have long predicted the demise of the US dollar as the reserve currency, and they have consistently been proven incorrect. For years, the issuance of greenbacks has been on the rise, and it remains uncertain whether the recent reversal is merely a temporary fluctuation or indicative of a long-term trend. As of June, the greenback had represented 63 percent of bonds issued by borrowers outside their home currency, marking a 20 percentage-point rise since the end of 2007, according to data. The euro’s share declined to 25 percent from 32 percent over the specified period. However, the growing appeal of the euro to Asian market participants for funding and debt investment signifies a “normalization” after the surge in dollar sales, stated Martin Schulz. “We have a more multipolar world,” he stated. Notable transactions in Europe this year feature China’s €4 billion bond sale, which garnered bids exceeding €100 billion, alongside Japanese telecom giant NTT Inc.’s €5.5 billion offering, marking the largest corporate euro issuance from Asia in 2025.
“It gives you a broader market to invest in, with cash flows from different regions and different types of companies,” stated Chris Iggo. “It is a fairly healthy development.” The continent’s allure as a funding destination is anticipated to endure into the following year. Owen Gallimore predicts that Asian borrowers’ euro issuance will rise to $125 billion in 2026, marking an increase of over 20 percent. “We see issuers on the whole looking to expand their footprint, not just within Asia but also outside, with Europe continuing to be a key marketplace,” said Henry Loh. “We anticipate an increase in interest regarding euro issuance to support this growth.”
