Although the amount of funds raised in foreign currency is not such a large share of total bond issuance by eurozone governments ($1.6 trillion in 2025), the marked increase in such issuance gives clear signals to the market, says the Financial Times.
The publication argues that this primarily reflects a desire by eurozone governments to attract a wider group of investors in an increasingly oversupplied bond market.
In addition, the surge in foreign-currency borrowing shows how the European Central Bank’s abandonment of its massive bond-buying program has forced debt managers to turn to a broader group of international buyers to meet their growing borrowing needs. This approach mimics a strategy increasingly popular among corporate borrowers, including large technology companies and other sectors of developed economies. They have long practiced diversifying their borrowings across currencies.
Flexibility and benefits
Not the largest eurozone countries – Belgium, Finland, Austria and Slovakia – are particularly active in diversifying their debt portfolios.
As the Financial Times notes, many bankers agree that smaller issuers are seeking flexibility in global markets that have already absorbed huge amounts of debt. Total global debt rose to a record $348 trillion last year, driven by government defense spending.
The publication also believes that for some borrowers, the main reason for issuing non-euro bonds is to save money. Issuers typically assess the relative cost of borrowing in euros versus foreign currencies for temporary price distortions, after fully hedging currency risks with so-called cross-currency swaps. Another objective is to expand the pool of potential buyers.
