Citi sees intensifying competition for capital between governments and companies
SPY•Citi sees governments and companies competing more intensely for capital as funding needs rise and interest rates remain higher for longer. It says infrastructure spending and corporate AI investment are increasing demand, while elevated U.S. dollar rates are encouraging issuers to seek local-currency funding.
1. Rising demand for capital
Citi says government infrastructure spending and corporate investment in AI are adding to demand for a finite pool of capital. Elevated U.S. dollar rates are pushing sovereign and corporate issuers toward local-currency funding to diversify liquidity sources and optimize borrowing costs.
2. Emerging market pressures
Emerging markets face pressure on public finances from elevated debt burdens and higher borrowing costs, increasing interest in debt-for-development transactions. Citi expects the U.S. dollar to remain the dominant global reserve currency, supported by the depth and liquidity of U.S. financial markets.
