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LONDON/DUBAI – Emerging market debt sales boomed in the first half of the year, defying tariff tantrums, missile attacks and gyrating oil prices, on track for another year of records – and with nascent signs of a shift away from the dollar, bankers told Reuters.
Cash-rich investors keen for margins – and to diversify their portfolios – hardly paused their buying spree even during US President Donald Trump’s “Liberation Day” sweep of tariff announcements or Israel’s attacks on Iran.
Record supplies of new bonds could continue, with low oil prices driving exporting countries to keep borrowing to fund spending.
“What is astonishing this year is how markets … were still active, if not very active, in the toughest moments of the globe,” said Alexis Taffin de Tilques, global head of emerging markets sovereigns and head of Central and Eastern Europe, Middle East and Africa debt capital markets with BNP Paribas.
“The volumes of issuance have been incredible.”
Stefan Weiler, head of debt capital markets for CEEMEA at JPMorgan, said debt sales in the group of regions surpassed USD 190 billion in the first half of the year, on course to beat last year’s all-time record of USD 285 billion.
The surge is another sign of investor interest in emerging market assets in a year that has been marked by the sort of turmoil that typically sends investors fleeing for safe-havens.
“Investors are very cash rich … eagerly looking to deploy their cash in the primary market,” said Weiler, predicting that if oil prices fell, issuance from the Middle East and North Africa could rise further.
The Gulf, led by behemoth Saudi Arabia, issued just over 40% of CEEMEA debt, bankers said, as companies and countries took advantage of a dip in interest rates and the expectation that US Treasury yields would remain elevated for some time.
“It has been definitely a record first half of issuances this year” for the Middle East, said Khaled Darwish, head of CEEMEA Debt Capital Markets at HSBC, calculating that Middle East issuers had raised bond and sukuk deals worth USD 106 billion so far this year, compared with USD 139 billion for the whole of 2024.
“The impact of all the geopolitical developments that happened this year has been quite minimal on the GCC market,” he added.
Geopolitical upheaval has even helped demand for certain issues. Investors who may once have been cautious about defence companies have become keener in response to higher military spending in NATO countries following Russia’s invasion of Ukraine. Czech defence and industrial company CSG more than doubled its dual-tranche 2031 bond issue to 1 billion euros and USD 1 billion in response to strong investor demand.
DIVERSIFICATION
Fixed-income investment is better shielded from geopolitical turmoil than equity markets, Taffin de Tilques said. Weiler said crossover investors are keen for the bigger margins emerging market debt offers.
Citi’s debt finance team said global emerging-market issuance volumes were up 20% year-on-year for the first half of 2025, with corporate issuance growing particularly quickly.
While much of it is refinancing, new issuers have joined the fray such as Saudi mining giant Maaden, with a sukuk worth USD 1.25 billion, and Angola’s Azul Energy, which debuted with a USD 1.2 billion bond.
Victor Mourad, Citi’s co-head of CEEMEA debt financing, said the growing list of debut issuers offered investors diversification.
Darwish and Weiler said there are also more governments and corporates turning to other currencies – chiefly the euro – to diversify away from the dollar.
Saudi Arabia issued in euros this year, as did Sharjah in the United Arab Emirates. Weiler said other currencies were being explored too, from Japanese yen to “Panda bonds” issued on China’s domestic market in yuan. Uruguay sold its first sovereign bond in Swiss francs.
“There’s definitely a theme among global issuers currently exploring more non-USD financing alternatives as borrowers are seeking to achieve less reliance on USD-denominated funding,” Weiler said, adding it was an early sign of de-dollarisation. “I think it’s the start of a clear trend.”
Mourad said the other notable trend was a move away from 30-year issues; he said there were only two 30-year transactions from the CEEMEA region in the first half of the year. Yield curves have become steeper globally, making longer-term issues more costly to governments and corporates than before.
“The long end supply has been replaced by a surge in volumes for three-year transactions as issuers took a view on short-term rates,” Mourad said.
(Reporting by Libby George in London and Federico Macconi in Dubai; Editing by Karin Strohecker and Peter Graff)
