Asian Economies Surge in Euro Borrowing, Eroding US Financing Edge

URGENT UPDATE: Asian economies are rapidly shifting their financing strategies, with euro-denominated bond issuance soaring to a record 23% of total issuance in 2025, up from 17% in 2024. This significant change, driven by a desire to diversify away from reliance on the US dollar, reflects growing concerns over the impact of President Donald Trump’s trade policies and Federal Reserve interest rate cuts.

According to Bloomberg data, euro note sales by Asian companies and governments skyrocketed by 75% this year to €86.4 billion (approximately $100.7 billion). This surge indicates not just a tactical move against US tariffs but a broader strategy to seek financial stability and reduced costs.

Daniel Kim, co-head of debt capital markets for Asia Pacific at HSBC, noted, “A key driver is the need to diversify away from US dollar concentration.” The shift to euro-denominated bonds has been particularly pronounced, as Asian borrowers responded to diminished investor confidence in the dollar, which has slid 11% against the euro.

Market dynamics reveal that US dollar deals still dominate, with a 29% increase in borrowing by Asian issuers this year. However, the market share for dollar financing is declining, raising questions about the long-term dominance of the greenback.

Ben Wang, head of offshore China debt capital markets at Deutsche Bank AG, stated, “De-dollarization or diversification of investment portfolios to have more deployment in non-dollar currencies is a theme we have witnessed this year.” This sentiment is echoed by increasing demand for euro assets, as evidenced by standout euro bond sales like China’s €4 billion bond that attracted over €100 billion in bids and NTT Inc.’s €5.5 billion offering, marking the largest corporate euro issuance from Asia in 2025.

The trend reflects a broader global economic shift towards a multipolar financial landscape. Martin Schulz, chief economist at Fujitsu Ltd., emphasized, “We have a more multipolar world.” As Asian economies expand their footprints beyond regional markets, Europe is set to remain a crucial hub for financing.

Forecasts indicate that euro issuance by Asian borrowers could rise to $125 billion in 2026, representing over a 20% increase. Henry Loh, head of Asia credit at Aberdeen Investments, highlighted, “We expect to see growing interest in euro issuance to finance this growth.”

With the euro’s increasing attractiveness for Asian market players and lower funding costs, this development signifies a critical pivot in global finance. Investors now have broader markets to engage with, diversifying cash flows and investment opportunities.

As this trend evolves, stakeholders across the financial landscape are closely monitoring these shifts. The implications for the US dollar’s status as the world’s reserve currency remain uncertain, with many experts divided on whether this trend is a temporary fluctuation or a fundamental change in the capital markets.

Developments in euro-denominated debt issuance will be essential to watch as Asian economies continue to adapt and respond to global economic pressures. The urgency for diversification and strategic financial planning has never been clearer.