The American asset aura is fading, and the global government issuance of US dollar bonds has dropped significantly.

The issuance of US dollar bonds by Asian and European governments is significantly lower than usual, as they prefer to issue bonds domestically to avoid the impact of rising US bond yields, exchange rate fluctuations, and widespread concerns about the US government's fiscal condition. Data from Dealogic shows that the issuance of US dollar bonds by non-US sovereign countries has decreased by 19% year-on-year in the first five months of this year, to $86.2 billion, the first decline in three years. In 2025, the issuance of US dollar bonds by non-US sovereign countries decreased. From January to May, the issuance of US dollar bonds by the governments of Canada and Saudi Arabia decreased by 31% and 29% respectively, to $10.9 billion and $11.9 billion; while the issuance by the governments of Israel and Poland decreased by 37% and 31% respectively, to $4.9 billion and $5.4 billion. At the same time, Dealogic data shows that the global issuance of sovereign local currency bonds has climbed to $326 billion so far this year, the highest level in five years. As the issuance of US dollar bonds declines, global investors are pulling out of US assets, partially in response to tariffs and doubts about the US financial dominance and security. Countries experiencing a significant decline in the issuance of sovereign US dollar bonds. Johnny Chen, a portfolio manager at William Blair's Emerging Markets Debt team, said that the increase in local currency issuance is mainly driven by weakening inflation pressures pushing down local interest rates. He also noted that India, Indonesia, and Thailand have all lowered their benchmark rates this year. Chen stated: "For India in particular, as Indian local currency bonds are included in global bond indices, their local currency bond market has further matured. This development may expand the investor base, prompting more local currency bond issuance by 2025." Sources revealed that Brazil is considering issuing its first batch of sovereign bonds denominated in renminbi. Prior to this, Brazilian President Lula visited Beijing and reached a series of investment agreements and a currency swap agreement. Data shows that Brazil's issuance of US dollar sovereign bonds this year has decreased by 44%, to $2.4 billion. Saudi Arabia raised 2.25 billion (about $2.36 billion) through the issuance of euro-denominated bonds, including the initial issuance of so-called green bonds, in line with Saudi Arabia's diversification strategy away from being tied to the US dollar for financing. Kenneth Orchard, Head of International Fixed Income at T. Rowe Price, said: "The challenge with onshore local currency bonds is that the issuance sizes are often much smaller and the liquidity is poorer. But we believe that over time, these markets will attract more international investors."