China's Ministry of Finance (Photo: VCG)
Rising US long-term treasury yields are reshaping the global financing landscape. As dollar funding costs increase, driven by surging AI investment demand and widening government fiscal deficits, a growing number of international issuers are seeking alternatives to the US dollar.
Asia-Pacific bond markets — denominated in currencies such as the Australian dollar and the Chinese yuan, from "kangaroo bonds" to "panda bonds" — have gradually evolved from relatively marginal funding channels into key platforms for global corporations and sovereign issuers seeking to diversify their funding sources.
US tech giant Alphabet Recently raised A$5.5 billion ($3.94 billion) through its inaugural Australian dollar bond issuance, marking the latest case of global tech firms broadening their financing channels. According to term sheet documents, investor orders for the offering exceeded A$18 billion. Alphabet has become the first AI hyperscaler to enter the Australian dollar debt market, and the first major US tech company to issue such "kangaroo bonds" since Apple did so in 2016.
Big tech is not alone in its global dash for capital. Foreign borrowers are ploughing into once-niche Asia-Pacific bond markets in an era of rising uncertainty and record, according to Reuters.
Germany's Commerzbank, French utility Engie, Persil-owner Henkel, Singapore Airlines and the Portuguese government have this year sold bonds denominated in Australian dollars and Chinese yuan - both onshore and offshore - for the first time.
In fact, "kangaroo" bond sales from foreign issuers in Australian dollars are at a record high of around A$60 billion ($42 billion) so far this year, up roughly 40 percent from 2025, LSEG data tracking internationally placed deals to late July shows, said Reuters.
Chinese onshore "panda" and offshore "dim sum" yuan bond sales reached record highs of around 160 billion yuan ($24 billion) and 350 billion yuan respectively in the first half, rising more than 60 percent compared to this time last year, according to Goldman Sachs, with half of it coming from international borrowers.
"We've reached a tipping point where these markets have tipped over into being significantly more meaningful both to local names and inevitably to international names," reported Reuters, citing Carla Goudge, head of debt syndicate, Asia-Pacific at HSBC.
Pan Xiangdong, chief economist of QiLai Research Institute, told Global Times that the sharp rise in US and European long-term rates has significantly pushed up dollar funding costs, prompting global issuers to turn to Asia-Pacific currency markets with relatively lower interest rates and more stable exchange rates, such as the Chinese yuan and Australian dollar.
At the same time, continued growth of overall financial wealth across the Asia-Pacific region — such as the rapid expansion of local institutional assets like Australian pension funds — has provided ample demand for the region's bond markets.
Pan noted that economies such as China, have, to some extent, effectively blocked the direct transmission of external interest rate fluctuations through capital account management, relatively stabilizing their onshore bond markets and further enhancing their appeal as a global "safe haven" for funds.
The Asian rush is one way issuers are diversifying their funding sources as the AI investment boom and high government deficits boost borrowing needs across US markets and beyond, bankers said, according to the report from Reuters.
Global international syndicated bond sales in 2026 surpassed $4 trillion by late July, according to LSEG, from around $3.5 trillion in the same period last year.
Against this backdrop, China's yuan bond market is emerging as a key destination for overseas issuers looking to tap into Asia-Pacific financing markets, with the rapid rise of "panda bonds" drawing particular attention. Pan believes that foreign companies issuing yuan-denominated bonds in China are attracted not only by the cost advantage of yuan funding but also by exchange rate stability, business alignment, and the opportunity to expand their investor base.
On the global financing trend, Pan said it is essentially a structural diversification of financing methods, rather than a process of de-dollarization.
He stressed that the dollar funding market still dominates globally and remains enormous in scale. However, the current trend shows that global issuers are actively building multi-currency financing portfolios, including the yuan, Australian dollar, and Hong Kong dollar, to reduce over-reliance on a single currency, especially the dollar, in terms of interest rate and liquidity risk. Pan believes this is an adaptive adjustment of the global financing system against the macro backdrop of rising US interest rates and increasing geopolitical uncertainty, with risk diversification at its core.
Looking ahead, Pan predicts that the market will move toward a pattern of both divergence and deepening. Specifically, markets with stable interest rate differentials, ample liquidity, and sound macroeconomic fundamentals — such as the yuan bond market — will further consolidate their regional and even global financing positions, while some smaller-capacity markets may experience increased volatility due to rapid shifts in supply-demand dynamics. Overall, Pan believes that financing diversification will become a long-term structural trend, but the process will be gradual and not smooth.