New World Investment Research

Asia-Pacific borrowers have sharply increased euro-denominated issuance, with volumes jumping about 75% this year and pushing the euro’s share of their cross-border financing to a record level.

Recently China sold €4 billion of euro-denominated bonds with bids exceeding €100 billion. Such tendencies coupled with divergence in trade between China, US and the rest of the world highlights the potential for pivot away from US being the dominant financial market and source of financing. As for now, increased euro-denominated issuance can be explained with lower funding costs and rate differentials. But it doesn’t mean that diversification away from U.S. can’t become a long-term trend.