GOVERNMENTS around the world are shunning dollar-denominated bonds in favor of raising funds domestically.
According to Dealogic, issuance of dollar bonds by governments in Asia and Europe dropped by 19 percent to $86.2 billion in the first five months of 2025 compared to the early months in 2024.
The decline in global dollar bonds offering is the first to happen in the last three years.
Non US-countries are raising far less debt in US dollar than usual, preferring to issue at home to avoid exposure to currency volatility, according to the financial data platform.
Dealogic also reported that the January-May dollar bond issuance by the governments of Canada and Saudi Arabia dropped by 31 percent and 29 percent to $10.9 billion and $11.9 billion, respectively.
Dollar bond issuance by Israel declined by 37 percent to $4.9 billion while Poland’s shrank by 31 percent to $5.4 billion.
The domestic bond issuance of countries outside America, meanwhile, increased to a five-year high of $326 billion so far this year.
‘For ordinary Filipinos, going local in borrowings is just as abstract as tariff wars and trade imbalance.’
The aversion to dollar bond issuance comes at a time when global investors are staying away from US assets amid the high tariffs as they question US financial stability and safety, Dealogic said.
India, the world’s fourth largest economy, will issue more domestic bonds in 2025 while Brazil will float its first global bond in yuan following their president’s recent visit to Beijing.
Brazil’s US dollar bond offering fell by 44 percent to $2.4 billion this year.
Saudi Arabia, the biggest economy in the Middle East, has recently sold $2.36 billion in Euro-denominated bonds as part of its strategy to diversify away from dollar-linked financing.
But China, the world’s second largest economy, and South Korea are bucking the trend.
In 2024, China issued $77.1 billion worth of dollar bonds, an 81 percent jump from the $42.5 billion raised previously while South Korea’s dollar bond issuance rose 14.5 percent to nearly $50 billion.
It’s still not clear if this defiance will continue to persist this year.
According to JP Morgan, the US dollar strength is unlikely to continue indefinitely and has historically alternated between periods of strength and weakness.
Unfortunately, the dollar now is experiencing a period of strength, which translates to higher servicing of our dollar obligations.
The Philippines appears to have caught up with the emerging global trend by capping its international bond offering to $3.5 billion this year.
It is also unlikely to do another global bond float in 2025 after it raised $3.3 billion in late January from the issuance of dollar-euro bonds.
The Bureau of the Treasury said its financing program of P2.545 trillion this year will have a mix of 80 percent domestic and 20 percent foreign sources.
When Finance Secretary Ralph Recto earlier announced that government wants to reduce foreign borrowings to 10 percent, it was not clear how much of this will remain in dollar bonds.
The government turns to dollar bond issuance to finance national government deficits, obtain foreign exchange (forex), and secure financing at more favorable rate.
For ordinary Filipinos, going local in borrowings is just as abstract as tariff wars and trade imbalance. But with a national debt running to P16.3 trillion, the 117-million population is impacted that we are theoretically indebted with P136,752 each.
Economists have long argued that domestic borrowings pose less risks than dollar bonds since any fluctuation in the greenback affects the country’s ability to pay.
That’s why reducing forex risk and avoiding dollar debt with high interest by going local is the way to go.
