Asian issuers have increased euro-denominated bond sales by 42% year-on-year in 2025, challenging the U.S. dollar's dominance in global debt markets. The trend reflects growing diversification in international financing and potential long-term implications for the dollar's reserve status.
- Asian euro-denominated bond issuance rose 42% YoY to €148 billion in 2025.
- U.S. dollar-denominated issuance by Asian firms grew only 4% over the same period.
- Euro-area 10-year sovereign yields averaged 3.42% in 2025, below U.S. 10-year yield of 4.15%.
- Japanese firms increased euro-linked financing by 37% since Q1 2025.
- Dollar’s share of global foreign exchange reserves remains at 58%, but faces structural pressure.
- Yen averaged JPY 158 per USD in 2025, influencing hedging and currency choice.
A notable shift in global capital markets is emerging as Asian entities increasingly turn to euro-denominated debt, weakening the traditional U.S. dollar advantage in international financing. Data from the first 11 months of 2025 shows that Asian borrowers issued €148 billion in euro bonds, up from €104 billion in the same period last year—marking a 42% year-on-year increase. This surge coincides with a decline in dollar-denominated borrowing by Asian firms, which grew by only 4% during the same timeframe, despite continued strong demand for U.S. Treasuries. The trend underscores a broader structural change in global finance, driven by diversification efforts among central banks, corporations, and sovereign wealth funds. While U.S. 10-year Treasury yields remain at 4.15%, euro-area sovereign yields on comparable debt average 3.42%, making euro debt more attractive for issuers seeking lower financing costs. Additionally, the yen's persistent weakness—averaging JPY 158 per USD in 2025—has prompted Japanese firms to hedge against dollar exposure, further boosting euro usage. Market participants note that the shift may not immediately impact exchange rates or U.S. interest rate policy. However, sustained euro borrowing by Asian issuers could reduce demand for dollar funding, potentially contributing to a gradual erosion of the dollar's share in global foreign exchange reserves, currently at 58%. Financial institutions in Hong Kong, Singapore, and Seoul have reported a 37% rise in euro-linked syndicated loan arrangements since Q1 2025. While the U.S. still maintains a commanding lead in global debt issuance, the growing Asian presence in euro markets signals a potential reordering of financial power. This development may influence central bank foreign exchange strategies and could affect long-term capital flow dynamics across emerging and developed markets.