Euro debt deals surge in emerging markets as dollar loses appeal

Emerging-market governments and companies are rushing into the euro bond market faster than they have in over a decade, according to Bloomberg.

With the dollar down nearly 8% this year and Trump’s return to the White House fueling uncertainty around tariffs and US economic policy, borrowers from Eastern Europe to Asia are looking for other options. And the euro is winning that attention.

This year alone, developing economies have sold €89 billion worth of euro-denominated debt by July 18 — the highest amount for that time frame since at least 2014. That includes €21 billion from Poland and Romania alone. Government issuance has already blown past 2024’s full-year total.

Poland even rolled out its first green bonds since 2017, and Bulgaria secured €3.2 billion in sales after a credit rating upgrade tied to its entry into the eurozone next year. These countries aren’t just experimenting. They’re using momentum to raise serious money fast.

Romania, Poland, Chile, and more ditch dollars to raise euros

Romania sold euro bonds for the third time this year after markets responded positively to May’s election of a centrist candidate. In Asia, South Korea and China both tapped the euro bond market. Even Chile jumped in. The crowd is growing, and there’s one thing they all have in common: none of them want to stay too exposed to the USD.

Matthew Graves, a portfolio manager at PPM America, put it like this: “We have been more active in looking for opportunities outside of US dollars credits.” He prefers Ivory Coast’s euro bonds over its dollar debt, pointing to the stronger spreads. “Directionally, we like owning euros versus dollars right now.”

That sentiment is being echoed across Wall Street. Strategists at Goldman Sachs ran comparisons between euro and dollar bonds issued by the same governments on the same day. The result? Euro bonds outperformed dollar ones more frequently one week after issuance. 

“The increase in euro-denominated bond issuance has generally been well absorbed by the market,” Kamakshya Trivedi and his team wrote earlier this month. They expect this to continue as the US economy slows and the dollar keeps losing ground.

Big players reevaluate dollar strategy as euro gains appeal

As the dollar weakens, the appetite for diversification is growing. Bank of America is betting on Romania’s 2044 euro bonds while holding a bearish view on its dollar notes with the same maturity.

JPMorgan strategists, led by Stefan Weiler, say Poland, Hungary, Mexico, and Morocco offer some of the most attractive euro-denominated opportunities for investors moving away from dollar debt. 

Weiler, who heads debt capital markets for Central Europe, the Middle East and Africa at JPMorgan in London, made it clear: “If you have an ambition to issue in euros, this is the time to do it. Borrowers have been noticeably more active in diversifying and exploring also some niche markets.”

David Robbins, co-head of TCW Emerging Markets Group, says investors still see value in emerging markets. “The relative yield advantage you’re getting in EM to what you’re getting in other markets continues to look attractive,” Robbins said. 

That interest is propping up debt sales across both euro and dollar markets. Even with the growth in euro issuance, dollar bonds are still moving fast. 2025 is already seeing the most dollar-denominated emerging-market debt sold since 2021.

But the euro is making gains in all the right places. Brazil, which has already sold over $5 billion in dollar bonds this year, is preparing to issue its first euro-denominated bond since 2014. Colombia plans to follow, preparing its first euro bond sale since 2016. 

Egypt is also considering hard-currency issuance that includes euro debt in the next year. And in the Balkans, Bosnia-Herzegovina is about to join the international debt markets for the first time, with a five-year unsecured euro bond on deck.

This isn’t just a passing trend. With Trump’s tariffs rattling global trade, the Federal Reserve caught in crossfire, and growth in the US not looking so “exceptional” anymore, investors are reassessing what they want in their portfolios.

Borrowers are responding, and the euro is getting louder. The dollar might not be gone, but it’s definitely not alone anymore.

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