Companies and non-sovereign issuers in Asia Pacific have sold over $1.5 trillion in bonds so far in 2025 in the region’s currencies, a 6% increase and a record for the current period.
President Donald Trump’s unpredictable policy decisions have consistently caused uncertainty for everyone. However, this time it acted in favour of Asian local-currency bonds, as it ignited investor demand.
Companies and non-sovereign issuers in Asia Pacific have sold over $1.5 trillion in bonds so far in 2025 in the region’s currencies, a 6% increase and a record for the current period. The highest offering happened during the three months from April to June.
Daniel Tan, a portfolio manager at Grasshopper Asset Management, stated that they are witnessing more buyers of local-currency Asian bonds than before April. There is a larger investment from pension and sovereign wealth funds, as investors are trying to diversify away from dollar-denominated assets.
The momentum started after April 2, when Trump announced that he would increase tariffs on allies and rivals, which caused stocks to slide and bond yields to spike. Later, Trump withdrew his announcement after a few days. While risk assets recovered, credit investors have been moving away from tariff-related volatility and a declining currency to less-exposed areas.
The bonds in local currencies have increased 3.9% outpacing a 3.5% return from US counterparts.
Angus Hui, Head of Fixed Income and Deputy Chief Investment Officer at Fullerton Fund Management in Singapore, stated that there will be increased demand in the future as investors diversify to broader Asian local currency markets.
He added that the trend toward de-dollarization is drawing attention to local currency loans in markets including Singapore and Australia, which have AAA sovereign ratings.
The Asia bond market is attracting investors due to strong local economies. Indian companies raised a record 6.6 trillion rupees ($76.4 billion) through local-currency notes in the first half of 2025, up 29% from last year.
Declining borrowing costs have made financing more attractive to domestic companies in China, where more than $1 trillion in local currency bonds have been issued this year.
Navin Saigal, Head of Fundamental Fixed Income for Asia Pacific at BlackRock Inc., has a different opinion on the trend of de-dollarization. He stated that as one diversifies from the US and more liabilities are in dollars, it is crucial to have dollar assets in the portfolio.
Saigal stated that tariff threats have increased the distance between Asia and the US, a difference reflected in fiscal conditions.
One of the best examples is Australia. It has AAA ratings from S&P Global Ratings, Fitch Ratings, and Moody’s Ratings. However, due to its growing debt-servicing expenses, the US has lost its highest credit score.
Oliver Holt, head of debt syndicate and IG origination for Asia ex-Japan at Nomura Holdings Inc., one of the managers of Aussie-denominated bond sales by foreign issuers, states that no one in the world is discussing Australia’s economic viability. He added that it makes sense for investors investing in other assets if there is a forecast that the US dollar will weaken.
Meanwhile, Asia’s dollar bond market is recovering from a slump caused by record defaults from Chinese real estate developers.
Japanese companies have led this year, helped by M&A activity, with dollar bond sales from the Asia-Pacific region (APAC) worth $215 billion. That is still far short of the previous year.
In 2025, APAC borrowers are accessing the European debt market at an unprecedented rate. Euro bond issuance has already exceeded last year’s full-year total, totaling over €49 billion ($57.6 billion).
Owen Gallimore, Head of Credit Analysis for APAC at Deutsche Bank AG, disagrees with the notion that everyone is selling US investment or APAC US dollar investment-grade bonds. He continued saying that Asian-based investors want their issuers to come to market more often in euros, offshore yuan, or other currencies.