Asian borrowers are rapidly reshaping the global funding landscape in 2025, shifting more of their debt issuance to Europe as confidence in the U.S. dollar continues to wobble. What began as a response to U.S. tariffs and trade uncertainty has evolved into a significant realignment of financing strategies across the Asia-Pacific region.
New Bloomberg data shows that 23% of Asia Pacific bond issuance this year was denominated in euros, the highest on record and up six percentage points from 2024. Euro borrowing surged 75% year-over-year to €86.4 billion ($100.7 billion) as companies and governments increasingly tapped Europe’s capital markets.
Multiple Asian deals became some of the most oversubscribed transactions in Europe’s syndicated debt market, highlighting strong demand from investors seeking diversification.
While U.S. dollar issuance is still the region’s largest funding source and is up 29% in 2025, its market share has slipped—suggesting that the long-standing U.S. financing advantage may be gradually weakening.
Why Asia Is Issuing More Euro Debt
1. Diversification Away From Dollar Dependence
“For many borrowers, the motivation goes beyond refinancing,” said Daniel Kim, co-head of Asia Pacific debt capital markets at HSBC. “There is a growing strategic need to reduce overexposure to U.S. dollar funding.”
Asian companies have become increasingly cautious as U.S. President Donald Trump’s renewed trade pressure and public criticism of the Federal Reserve inject fresh volatility into American markets. With the dollar dropping 11% against the euro, confidence in the greenback’s stability has eroded.
2. Rising Momentum for De-Dollarization
According to Ben Wang of Deutsche Bank, investors and borrowers alike are leaning into non-dollar assets.
“We’ve seen a clear shift toward currency diversification this year,” he said, noting that euro trading volumes in Deutsche Bank’s APAC business climbed from negligible levels at the start of the year to more than 10%—even 20%—in the second half.
3. Cheaper Funding Costs in Europe
Borrowers have also been drawn by favorable economics. Funding in euros has become cheaper than raising cash in U.S. dollars or many Asian currencies.
The cost of swapping euros back into dollars has fallen to a near five-year low of 3.1 basis points, significantly reducing overall funding costs.
Is the Dollar Losing Its Global Status?
Predictions of the dollar’s decline have been common for decades—and consistently wrong. The greenback continues to dominate global financing:
- As of June 2025, the U.S. dollar made up 63% of all bonds issued outside borrowers’ home currencies.
- That share has risen 20 percentage points since 2007.
- The euro’s share has fallen from 32% to 25% over the same period, according to the Bank for International Settlements.
Still, analysts say the recent euro resurgence does not necessarily signal a collapsing dollar but instead reflects a normalization after years of dollar-heavy issuance.
“We are moving toward a more multipolar world,” said Martin Schulz, chief economist at Fujitsu in Japan.
Major Asian Deals Fuel Europe’s Boom
Some of 2025’s biggest and most sought-after bond sales have come from Asia:
- China issued a €4 billion sovereign deal that drew a staggering €100 billion in orders.
- NTT Inc. of Japan launched a €5.5 billion transaction, the largest euro-denominated corporate deal from Asia this year.
According to Chris Iggo of Axa Investment Managers, Europe’s expanding role offers investors a broader set of credit profiles and geographic cash-flow exposure—ultimately strengthening global markets.
What’s Next? Euro Issuance Expected to Climb Further
The momentum is unlikely to stop in 2026. Deutsche Bank analyst Owen Gallimore forecasts Asian euro-denominated issuance to rise to $125 billion next year, marking more than 20% growth.
Henry Loh of Aberdeen Investments noted that Asian issuers increasingly want a “broader global footprint” and view Europe as a critical market for future expansion.
“We expect continued growth in euro financing as companies look for stable and diversified funding channels,” he said.
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