Eurobonds are not a perfect substitute, but they may be someone’s only alternative. In some ways, Reflation #3’s weakness can be found originating in this context. The “rising dollar”, or eurodollar squeeze, of 2014-16 was a failure and even run on credit-based dollar funding offshore. If banks won’t deliver dollars, what’s left?
Bonds. There has been an offshore Eurobond market since there have been eurodollars to fund it. These two are not equivalent. Banks in the latter can conjure new “dollars” in the form of any bank liability they may dream up another bank will accept. This flexibility means complexity, and in the end fragility.
Eurobonds are savings, a portfolio allocation like stocks. Because it happens among offshore dollar holders doesn’t functionally shift the definitions like it does for eurodollars.
In 2016, in places like Argentina completely shut off from eurodollars the Eurobond market was a lifeline. It doesn’t matter where they get them, they have to have them. The whole world still needs dollars but increasingly there is nowhere to find them (on reasonable terms).