Global funding pressures are pushing familiar names into once niche markets, where local currencies now offer investors and issuers a compelling alternative.
Foreign borrowers are increasingly entering what were once niche bond markets in the Asia-Pacific region. Companies and governments are raising funds in Australian dollars, Chinese yuan, Hong Kong dollars, and yen, seeking to broaden their investor base and avoid relying solely on traditional dollar- and euro-denominated borrowing.
Since the start of 2026, Germany’s Commerzbank, France’s Engie, Persil maker Henkel, Singapore Airlines, and the Portuguese government have all made their first debt offerings in Australian dollars or yuan.
Sales of “kangaroo bonds” – Australian dollar-denominated securities issued by foreign borrowers – reached around A$60 billion, or US$42 billion, by the end of July. This was a record level and roughly 40% higher than in the same period of 2025. Issuance volumes in Hong Kong dollars also hit a record.
The yuan bond market is growing particularly rapidly. In the first half of the year, sales of onshore “panda bonds” in China reached around 160 billion yuan, or US$24 billion. Meanwhile, offshore yuan-denominated “dim sum bonds” totaled approximately 350 billion yuan. Both segments grew by more than 60% year on year, with international borrowers accounting for about half of all issuance.
We have reached a turning point where these markets have become much more important for both local issuers and, inevitably, international ones.
– Carla Goudge
Just a few years ago, this option simply was not available on a regular basis or at such substantial volumes.
– Carla Goudge
Activity is growing not only in Australia and China. The volume of yen bond sales by foreign borrowers has doubled this year. A record issuance by Alphabet, Google’s parent company, was a key driver. Even excluding that deal, foreign borrowing in yen reached its highest level in seven years.
Why issuers are seeking financing in Asia
The expansion into Asian debt markets is linked to rising global financing needs. The investment boom in artificial intelligence and large government deficits are intensifying competition for capital in major bond markets, particularly in the United States.
By the end of July 2026, the volume of international syndicated bond offerings worldwide had exceeded US$4 trillion. During the same period a year earlier, it stood at around US$3.5 trillion.
For most issuers that raise debt outside their primary currencies, this is often part of larger funding programs.
– Hampus Falth
According to Hampus Falth, bankers advise clients to act early and diversify their funding sources. This is becoming more relevant as major technology companies investing heavily in artificial intelligence increase their bond issuance in traditional large markets.
Investor demand and China’s role
Growing borrowing in Asian currencies is supported by strong investor demand. Financial assets are increasing across the region, while pension funds in Australia are expanding rapidly. This is broadening the buyer base for debt securities denominated in local currencies.
In China, market development is also linked to Beijing’s efforts to internationalize the yuan. Broadening the investor base for “dim sum bonds” and making it easier to issue “panda bonds” are helping foreign issuers raise and use funds in yuan.
As markets grow, they can gain a certain momentum because more and more people understand them better.
– Christopher Kent
More investors come here to buy these bonds, and more issuers see it as a good place to issue for various reasons. That creates growth, and growth generates further growth.
– Christopher Kent
The trend also reflects investors’ desire to reduce the concentration of assets in U.S. dollars. Asian investors and central banks that previously focused on dollar-denominated debt are increasingly considering bonds in Australian and Hong Kong dollars, as well as euros.
For companies with operations in China or Japan that plan to spend funds in local currencies, lower borrowing costs may be an additional advantage. Active issuers of “panda bonds” include German automakers and European financial institutions.
Portugal, Brazil, and Kenya eye the market
Asia-Pacific markets are still significantly smaller than the dollar and euro segments, so their capacity to absorb large volumes of debt has limits. Nevertheless, this is not deterring new participants.
Brazil plans to issue its first “panda bonds” later in 2026. Kenya is also considering entering the market.
In April, Portugal raised nearly 2 billion yuan, or about US$300 million, in the first “dim sum bond” issuance by a eurozone government. The state converted the proceeds into euros, achieving modest cost savings.
The two main direct objectives are diversifying the investor base and achieving cost savings.
– Rui Amaral
Rui Amaral noted that Portugal’s issuance may not remain a one-off transaction. For a growing number of borrowers, bonds in Australian dollars, yuan, yen, and other Asian currencies are becoming a practical tool for reducing reliance on the world’s largest debt markets.