Global government issuance of US dollar debt tumbling in 2025, data shows
Governments in Asia and Europe are raising far less debt in U.S. dollars than usual, preferring to issue at home as they avoid exposure to rising U.S. yields, currency volatility and broader concerns about U.S. government finances.
According to Dealogic data, issuance of dollar bonds by non-U.S. sovereigns dropped 19% to $86.2 billion in the first five months of this year compared with the same period last year, marking the first decline in three years.
The January-May dollar bond issuance by the governments of Canada and Saudi Arabia fell 31% and 29% to $10.9 billion and $11.9 billion, respectively, while issuance by Israel and Poland declined 37% and 31% to $4.9 billion and $5.4 billion.
At the same time, Dealogic data showed global sovereigns' local currency bond issuance had climbed to a five-year high of $326 billion so far this year.
This drop in dollar bond issuance comes at a time when global investors are pulling back from U.S. assets, partly in response to tariffs and as they question U.S. financial dominance and safety.
Johnny Chen, portfolio manager at William Blair's emerging markets debt team, said the rise in local currency issuance is largely driven by falling domestic interest rates as inflationary pressures ebb, noting that India, Indonesia and Thailand have all cut their benchmark interest rates this year.
"In India's case, the local currency debt market has also matured further with the inclusion of Indian local currency debt in global bond indices. This development has likely expanded the investor base, prompting more local currency issuance in 2025," he said.
Brazil is considering issuing its first sovereign bonds in yuan, two government sources said, after President Luiz Inacio Lula da Silva's visit to Beijing concluded with a wave of Chinese investment announcements and a currency swap agreement.
Brazil's sovereign U.S. dollar bond issuance has dropped 44% to $2.4 billion this year, data showed.
Saudi Arabia raised 2.25 billion euros ($2.36 billion) through a euro-denominated bond sale, including its first tranche of so-called green bonds, as part of its global medium-term note program, aligning with its strategy to diversify away from dollar-linked financing.
"The challenge with the onshore local currency is that those issuances tend to be much smaller, they're less liquid," said Kenneth Orchard, head of international fixed income at T. Rowe Price, based in London.
"But we think over time there are going to be more international investors in those markets."
(Reporting By Patturaja Murugaboopathy in Bengaluru and Jiaxing Li in Hong Kong; Additional reporting by Gaurav Dogra in Bengaluru; Editing by Hugh Lawson)
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Arabian Business
an hour ago
- Arabian Business
Over 1.67million pilgrims performing Hajj in Saudi Arabia: GASTAT
1,673,230 pilgrims are performing Hajj 1446 AH in Saudi Arabia, according to the General Authority for Statistics (GASTAT). According to GASTAT, 1,506,576 pilgrims arrived from outside Saudi Arabia, while 166,654 pilgrims are from within the Kingdom, including both citizens and residents. Hajj 2025 by the numbers: Total pilgrims: 1,673,230 International pilgrims: 1,506,576 Domestic pilgrims (citizens and residents): 166,654 Male pilgrims: 877,841 Female pilgrims: 795,389 Hajj in Saudi Arabia How pilgrims arrived: Airports: 1,435,017 Land border crossings: 66,465 Seaports: 5,094 These figures were compiled using administrative records from the Ministry of Interior, part of a standardised statistical model that GASTAT has successfully implemented over the past five years. This method ensures high accuracy, reliability, and consistency in Hajj statistics reporting. As the Kingdom's official statistical authority, GASTAT is the exclusive provider of official statistics in Saudi Arabia and is entrusted with overseeing all national statistical activities, including technical supervision, conducting field surveys and research, data analysis, and managing the documentation, preservation, and tabulation of statistical information across all sectors of life in the Kingdom.
Zawya
an hour ago
- Zawya
The world's auto supply chain is in the hands of a few Chinese bureaucrats
In a hulking grey building just east of Tiananmen square in Beijing, a small team in China's Ministry of Commerce is deciding the fate of the global auto industry, one rare earth magnet export permit at a time. China holds a near-monopoly on rare earth magnets - a crucial component in electric vehicle motors - and it added them to an export control list in April as part of its trade war with the United States, forcing all exporters to apply to Beijing for licenses. It falls to the Bureau of Industrial Security and Import and Export Control - which is part of China's Ministry of Commerce - to review export permits for the rare earth magnets, which are vital for car motors, wind turbines and even U.S. F-35 fighter jets. While dozens of licences have been issued since late April, executives, lobbyists and diplomats say they are only a small fraction of the applications that have flooded in from automakers, semiconductor companies and aerospace firms around the world since the tougher export controls were introduced. Washington says delays in issuing export licences show China is reneging on commitments made during trade talks in Geneva last month and it has retaliated with export curbs on plane engine parts and other equipment. U.S. President Donald Trump and Chinese President Xi Jinping held talks by phone on Thursday as the escalating dispute over China's rare earth stranglehold threatened to derail the fragile trade truce agreed between the two superpowers. When the new rare earth magnet measures came in, the export control bureau had a total of just 30 staff, though this has since been doubled to around 60, according to two sources who were briefed on a meeting between the ministry and Chinese and European semiconductor firms last week. "We appreciate that MOFCOM has increased its resources to address demand and they're working hard and long hours on these issues," said Adam Dunnett, Secretary General of the European Chamber of Commerce in China, referring to the ministry. "But the reality is this is having a huge impact on a wide variety of sectors. It's something that could have been better planned and rolled out," he said. According to personnel records posted to the Ministry of Commerce's website in June 2024, there are only three senior officials within the bureau who can approve the export permits. The ministry's website lists the export licence bureau's office hours as: Weekdays, 8:30-11:30 a.m., 14:00-17:00 p.m. Reuters was unable to determine current staffing levels or whether more officials are now able to approve applications. The Ministry of Commerce did not respond to questions from Reuters on this subject. CHOKEPOINT The global alarm over shortages underscores the enormous leverage China has acquired through its near-monopoly on rare earth production. It also reveals a complex bureaucratic process that has gone from checkpoint to chokepoint. "The process for our suppliers to apply for export licences for various rare earths ... since April, is complex and time-consuming, partly due to the need to collect and provide a lot of information," a spokesperson for Bosch, the German engineering and technology multinational, said last month. A Chinese-language guide to the process published by the Ministry in late March runs to almost 14,000 Mandarin characters. European auto suppliers alone have filed hundreds of requests since early April, with only about a quarter granted. These applications can range from dozens to hundreds of pages, according to sources who have either filed requests or been briefed about them. Public Ministry of Commerce guidelines require information including technical product descriptions, signed contracts. Descriptions of production facilities and photos of products are also encouraged. China's stated aim is to ensure dual-use items don't end up in military equipment, but officials are often overly cautious even though many applications clearly state commercial use, Dunnett said. "Another concern we have heard from some companies is that they are being asked for sensitive and excessive information that is part of their intellectual property which has led to delays in their applications," Dunnett added. While applications are meant to be processed in 45 working days, the ministry says applications related to national security will take longer, without defining how long. 'STRATEGIC EXCUSE' Cory Combs, head of critical mineral and supply chain research at Trivium China, a policy research group, said it was not clear whether the delays were due to bureaucratic inertia or intentional weaponisation. "We do expect these applications to U.S. end-users to be reviewed on par with other countries and approved whenever they're not for military use," he said. "The issue here is that, is it quick enough for the Trump administration to believe that Beijing has not reneged on the Geneva agreement?" Some U.S. industry figures believe that the bureaucratic backlog is a "strategic excuse". "China can staff up as fast as they want, if they wanted to," said a source from the U.S. rare earths industry who declined to be named for sensitivity reasons. In public, Chinese officials have said the export controls apply to all countries, the implication being that they do not count as a U.S.-specific countermeasure under the Geneva agreement. Foreign ministry spokesperson Lin Jian said on May 30 that the rare earth export controls are "non-discriminatory and not targeted at any specific country". During the Geneva talks, however, China privately admitted that the rare earth export controls qualified as non-tariff countermeasures, according to a source briefed on the talks. Rare earths remain a core part of ongoing U.S.-China discussions, the person said. China's foreign ministry did not immediately respond to a request for clarification. Chinese scholars openly admit that the rare earth export controls are retaliation for U.S. chip curbs. "It's a short-term form of leverage which doesn't hurt China, as the rare earths in question have relatively low monetary value," said Zhu Junwei, an international relations scholar at the Grandview Institution, a Chinese think-tank. (Reporting by Laurie Chen and Lewis Jackson in Beijing; Additional reporting by Beijing newsroom; Editing by David Clarke)
Khaleej Times
an hour ago
- Khaleej Times
Germany to boost military by up to 60,000 troops under new Nato targets
Germany needs up to 60,000 additional troops under new Nato targets for weapons and personnel, Defence Minister Boris Pistorius said on Thursday, as the alliance beefs up its forces to respond to what it sees as an increased threat from Russia. "We are stepping up to our responsibility as Europe's largest economy," Pistorius told reporters ahead of a meeting with his Nato counterparts in Brussels that signed off on the new targets. The fresh demands are tailored to the alliance's new defence plans - thousands of pages of secret documents drawn up for the first time since the end of the Cold War — that detail how allied forces would respond to a Russian attack on Nato. Translating these plans into the military tools needed, Nato found severe shortfalls in various areas - ranging from large formations of combat-ready ground troops to long-range weapons, sufficient ammunition stockpiles and secure communications. Pointing to the secret nature of the targets, Nato chief Mark Rutte only gave a rough outline of the gaps the alliance seeks to plug. "We have to invest in our air defence systems, we have to invest in our long-range missiles, we have to invest in our manoeuvrable land-formations, command and control systems - all of this has to happen," Rutte told reporters, adding that all this would require huge investments. In total, the Bundeswehr, Germany's armed forces, will need roughly 50,000 to 60,000 additional active soldiers across all branches of the military, said Pistorius. This would put the future strength of Germany's armed forces at between 250,000 and 260,000 troops. BIG CHALLENGE Last week, Reuters reported that Nato would ask Germany to provide seven more army brigades alone, or some 40,000 troops. Sources, who all spoke on condition of anonymity, put the target for the total number of brigades that Natoallies will have to provide in future at between 120 and 130, a hike of some 50% from the current target of around 80 brigades. Recruiting tens of thousands of extra troops will be a big challenge for Berlin, however, and will likely spark a fresh debate on whether conscription - suspended in 2011 - should be reintroduced. The Bundeswehr has not yet met a target of 203,000 troops set in 2018, and is currently short-staffed by some 20,000 regular troops, according to defence ministry data. Pistorius said the government would be faced with the question of whether the voluntary military service it aims to introduce will be sufficient to fill the Bundeswehr's ranks. Still, he warned that the military currently could not absorb a larger number of conscripts due to a lack of barracks and trainers. "Until we have such capacities, we'll have a voluntary service - and maybe beyond that if we are an attractive employer and win enough young men and women for the military who agree to serve for a longer time."
