- EM credit finished the week firmer as aggregate spreads tightened and high yield outperformed investment grade amid improving quarter-end risk appetite.
- Fund flow momentum weakened materially, with EM bond flows slipping to -US$67mn after several weeks of inflows.
- Lower oil prices remain the dominant macro driver, easing inflation concerns and supporting a more dovish policy bias across several EM economies.
- Primary markets remained exceptionally active, with June EM corporate issuance reaching approximately US$70bn, the second-highest June total on record.
Market Visualizer
Regional Credit Developments
Global EM Themes
- EM bond fund flows deteriorated to -US$67mn from +US$614mn previously as hard-currency inflows slowed sharply and local-currency funds recorded outflows.
- Flow momentum has weakened across both hard-currency and local-currency segments, with ETF demand softening while actively managed funds remain relatively resilient.
- Investor demand continues to favour carry opportunities rather than broad-based spread compression.
- Falling oil prices and reduced Middle East tensions have improved the EM inflation outlook, prompting a more dovish central-bank bias across EM.
- A more hawkish Federal Reserve path and a stronger US dollar remain the primary external risks for EM assets.
- Asia remains the most exposed EM region to renewed Fed tightening and USD strength, while Eastern Europe appears comparatively insulated.
Regional Developments
- Bahrain bonds declined roughly 0.5–1.1 pts and CDS widened amid concerns surrounding reserve adequacy and reliance on external support.
- Egypt outperformed peers after a US$1.64bn IMF-linked staff-level agreement, with sovereign spreads tightening despite broader market volatility.
- Ethiopia rallied around 3 pts after reaching an agreement in principle with bondholders and making additional progress in IMF negotiations.
- Senegal underperformed with sovereign bonds down approximately 1.25–1.75 pts due to IMF discussions and debt-reporting concerns, while Kenya also lagged despite World Bank support.
- Lower oil prices are expected to support disinflation across several African economies, while Angola and Mozambique traded firmer during the week.
- Lower energy prices have improved the monetary backdrop across much of Eastern Europe and supported a more dovish policy outlook.
- Ukraine gained roughly 1.25–2 pts and ranked among the strongest regional performers despite persistent military headlines.
- Georgia benefited from a Moody’s outlook revision to Stable, while Romania continues to outperform fiscal targets.
- Hungary drew investor attention after comments suggested the 2026 fiscal deficit could exceed 7%.
- Regional credit performance remained constructive, benefiting from lower oil prices and stronger global risk sentiment.
- Argentina outperformed, with sovereign bonds advancing approximately 0.125–0.75 pts over the week.
- Colombia tightened modestly as markets focused on fiscal developments and a surprise 75bp policy rate increase to 12%.
- Latin America appears less vulnerable to Fed tightening than in prior cycles due to stronger currencies and relatively contained inflation.
- Asia credit continues to face pressure from elevated issuance, higher Treasury yields and mixed fund flow dynamics.
- Asia investment-grade spreads widened during June as heavy supply coincided with hawkish Fed repricing expectations.
- Indonesia and Philippines sovereign curves widened during the week amid broader risk repricing across the region.
- US tariff developments remain a key risk for regional growth, while the World Bank upgraded Sri Lanka and Vietnam to upper-middle-income status.
Primary Markets
- June EM corporate issuance accelerated to approximately US$70bn, marking the second-highest June issuance volume on record.
- Asia led issuance activity with roughly US$32bn, followed by Middle East & Africa (US$18bn), Emerging Europe (US$13bn) and Latin America (US$7bn).
- Upcoming local-currency government bond supply remains heavy across Asia, EMEA, Latin America and frontier markets.
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DISCLAIMER
This document is strictly confidential and is being provided to you for informational purposes only. It does not constitute an offer to sell or a solicitation of an offer to buy any securities or financial instruments. The information contained herein has been obtained from sources believed to be reliable but is not guaranteed as to accuracy or completeness. Opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice.
AI Generation Notice: Portions of this content may have been generated or assisted by Artificial Intelligence (AI) technologies. Users should independently verify critical data points. Past performance is not indicative of future results.
- EM credit markets were broadly range‑bound with mild spread widening, as investors reduced risk amid heavy supply and geopolitical uncertainty.
- Flows returned to positive territory, with renewed inflows into EM bond funds after a period of flat activity, supporting technicals.
- Oil price declines (~>10%) driven by US‑Iran progress shifted macro dynamics, supporting oil importers but weighing on exporters.
- Valuations remain tight across regions, consistent with a late‑cycle setup characterized by stable fundamentals but limited upside.
Market Visualizer
Regional Credit Developments
Global / Cross‑EM Themes
- EM bond funds saw renewed inflows in the week to 24 June, reversing prior flat flows and supporting overall technical conditions.
- Flow recovery was broad but uneven, with local‑currency global funds lagging due to FX weakness, while EM credit funds and Asia‑focused funds saw inflows.
- High‑frequency data indicates +US$614mn EM bond inflows, driven by strong hard‑currency demand (+$651mn) and ETF participation.
- Equity flows remain volatile, though turned positive WoW (+US$1.1bn), highlighting improving but still fragile risk sentiment.
- Oil prices have declined sharply following easing tensions in the Strait of Hormuz, with Brent falling from >$110/bbl to below ~$73/bbl.
- The oil decline is expected to reduce inflation and improve current accounts across EM, especially for importers, though not fully reversing earlier shocks.
- Global macro remains mixed, with a more hawkish Fed outlook and inflation still elevated despite easing energy pressures.
- Overall EM economies are described as “remarkably resilient” despite volatility in energy and geopolitics.
Regional Developments
- Africa credit performance diverged by oil exposure:
- Oil exporters (Nigeria, Angola) underperformed as oil prices declined (‑0.75 to ‑1.50pts WoW)
- Importers (Kenya, Egypt) outperformed relatively, though absolute price moves remained muted
- Gabon sold off after a negative outlook revision, while Senegal outperformed despite restructuring headlines and fiscal uncertainty.
- Lower oil prices are expected to improve external balances for importers but weaken fiscal positions for exporters.
- CEE markets were volatile but resilient, with Romania trading around political headlines (confidence vote) before stabilizing.
- Ukraine bonds weakened (~‑1 to ‑1.75pts WoW) despite continued international financial support and intermittent geopolitical optimism.
- Lower oil prices ease inflation pressure across the region, supporting central bank policy stability.
- LatAm credit showed mixed performance, with new issuance (e.g. Mexico $4.8bn deal) trading broadly around reoffer levels.
- Venezuela/PDVSA underperformed, driven by debt burden estimates (~$240bn) and adverse headlines.
- Brazil corporates were volatile, with restructuring headlines (Braskem) and rating downgrades impacting price action.
- Macro outlook highlights ongoing data monitoring and event‑driven catalysts across the region.
- Asia credit remains tight but low‑return, reflecting a late‑cycle dynamic with limited spread compression left.
- Regional macro backdrop is improving in some economies (e.g. India), supported by lower oil prices and policy measures aimed at attracting inflows.
- High‑yield issuance activity is recovering on improving geopolitical sentiment, particularly amid hopes of Middle East peace.
Primary Markets & Supply
- Primary issuance increased materially, with ~$15bn EM ex‑Asia supply during the week.
- Supply was led by:
- Mexico (~$4.8bn 11Y + long‑end tap)
- Turkey (~$2.75bn sukuk)
- Local markets continue to show broad‑based bond supply across Asia, CEEMEA, LatAm, and frontier issuers, reinforcing liquidity conditions.
- Market tone reflects risk reduction into heavy supply, rather than a lack of demand.
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DISCLAIMER
This document is strictly confidential and is being provided to you for informational purposes only. It does not constitute an offer to sell or a solicitation of an offer to buy any securities or financial instruments. The information contained herein has been obtained from sources believed to be reliable but is not guaranteed as to accuracy or completeness. Opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice.
AI Generation Notice: Portions of this content may have been generated or assisted by Artificial Intelligence (AI) technologies. Users should independently verify critical data points. Past performance is not indicative of future results.
Executive Summary: EM credit delivered a broadly resilient performance with risk recovering into week-end following a US–Iran agreement that eased oil and geopolitical concerns, though hawkish Fed signals capped upside. LatAm sovereigns tightened while selective CEEMEA and Africa names outperformed, with Ukraine and Bolivia standing out on catalysts. Asia lagged amid weak China macro and supply concerns, while frontier sovereigns benefited from lower oil prices. Primary markets remained open but subdued, with flows and positioning continuing to drive dispersion across credits.
Market Visualizer
Regional Credit Developments
🌍 EM Ex-Asia Credit
- Global EM ex-Asia: Credit was mixed but resilient as risk recovered late WoW on easing geopolitics, though higher UST yields and hawkish Fed tone limited gains.
- Egypt / Turkey: Egypt 2033s/2050s rose +1.125pts/+2.0pts while Turkey 2036s/2047s gained +0.625pts/+0.75pts on lighter positioning and lower oil.
- MENA IG / CEE: MENA IG was mixed with selling in oil-linked curves; CEE choppy on Romania headlines, though Hungary supported ahead of expected 25bp cut.
- LatAm Sovereigns: Broad tightening with Argentina 2035s +0.25pts (‑7bp), Brazil 2035s +0.75pts (‑11bp), Colombia 2036s +1.125pts (‑11bp), DR 2035s +0.625pts (‑8bp).
- Brazil Flows: Local risk weak with Ibovespa -4% and Petrobras -10%, alongside largest equity fund outflows in 15 weeks; credit focus on Braskem and Raízen.
- Primary Market: Issuance remained open but light at ~USD 7bn, including Banorte, Southern Copper, Volcan, OTP and PKO.
- Africa E&Ps: Kosmos upgraded to Caa2 (Positive) but bonds fell -3.0pts to -1.0pts; Tullow and Gran Tierra also down -2.0pts to -1.25pts on lower oil.
- Kenya / Ghana: Kenya passed KES 18.2bn mini-budget with supportive secondary demand; Ghana secured USD 300m World Bank financing.
- Lebanon: Bonds down ~-1.0pts amid ongoing regional tensions, with IMF reform clarification deadline set for 25 June and ceasefire renewed late Friday.
- Ukraine: Strong performance with A bonds +1.125pts to +2.0pts and B bonds +1.875pts to +4.0pts on IMF SLA and USD 4bn pledged military aid.
- Argentina / Bolivia: Argentina +0.125pts to +0.25pts on USD 2bn WB guarantee and USD 2bn trade surplus; Bolivia +1.125pts to +4.375pts on IMF program progress.
- Colombia: 2036s and 2054s gained +1.125pts/+1.50pts into run-off vote, with spreads -11bp/-4bp and improving polling momentum.
- LatAm HY: Digicel upgraded to B1 (+0.50pts), CSN +1.0pts to +4.0pts on asset sale process, while Braskem fell -5.50pts to -3.0pts on restructuring concerns.
🇨🇳 Asia Credit: China Property & HY
- China Macro: Weak May data with soft retail and housing sales drove underperformance in Chinese risk assets versus global equities.
- Genting: Perpetuals fell ~-0.5pts following withdrawal of SGD deal, raising supply overhang for USD perpetuals.
🌏 Asia Credit: Frontier & Sovereign
- Global Macro: Brent fell -7.8% on US–Iran agreement while hawkish Fed drove UST flattening, tempering late-week risk-on sentiment.
- Pakistan / Sri Lanka: Long-end bonds rallied ~+2pts supported by lower oil prices.
- Indonesia Sovereign: Stabilisation after BI hiked rates by 25bp, extending tightening cycle.
- Garuda Indonesia: 2031 bonds outperformed, rising ~+3pts WoW.
- Woodside: Curve tightened ~5bp on M&A speculation before being denied.
- Laisun: Bonds rose ~+2pts into low 90s following exchange offer launch with terms broadly as expected.
www.gembridgecapital.com
DISCLAIMER
This document is strictly confidential and is being provided to you for informational purposes only. It does not constitute an offer to sell or a solicitation of an offer to buy any securities or financial instruments. The information contained herein has been obtained from sources believed to be reliable but is not guaranteed as to accuracy or completeness. Opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice.
AI Generation Notice: Portions of this content may have been generated or assisted by Artificial Intelligence (AI) technologies. Users should independently verify critical data points. Past performance is not indicative of future results.
Executive Summary: Emerging market credit traded with a constructive tone, supported by ongoing multilateral funding and improving sovereign credit momentum, particularly in Argentina and Ukraine. Price action was led by restructuring-driven gains in select LatAm corporates, while weaker credits underperformed on refinancing risks. Asia HY remained broadly stable with pockets of idiosyncratic volatility, and profit taking emerging after recent rallies. Frontier sovereigns benefited from softer oil prices and improved sentiment, with Indonesia supported by policy actions and renewed primary issuance.
Market Visualizer
Regional Credit Developments
🌍 EM Ex-Asia Credit
- Argentina: S&P upgraded sovereign to B- (Stable); USD bonds +1.375–3.0 pts, EUR bonds +1.875–3.0 pts, GDP warrants +0.375–0.75 pts WoW.
- Ukraine: Partial reform progress with IMF tranche approved; EUR 8.35bn EU support expected; bonds +1.0–1.75 pts.
- Zambia: 97.9% participation in eurobond tender; 2033 bonds +0.125 pts.
- Mozambique: $450mm World Bank grant secured; 2031 bonds +0.70 pts.
- Egypt: Gulf deposits fully rolled including USD2bn Kuwait rollover; bonds flat to +0.875 pts (2033s +0.375, 2050s +1.875).
- Naftogaz: Restructuring agreed with maturity extensions and 8.95% coupons; bonds +3.5–5.5 pts.
- CSN: Advancing restructuring and BRL12–13bn asset sale discussions; bonds +1.375–2.125 pts.
- Brazil Airlines: Applying for BRL5.5bn BNDES program; AZULBZ/GOLLBZ unchanged, Latam flat.
- Aegea: Downgraded to B+ on weaker financial profile; bonds -0.375–0.625 pts.
- Braskem: Exploring restructuring terms including maturity extension and coupon cuts; bonds -1.0–2.0 pts.
- Celulosa Arauco: Downgraded to BBB- on higher leverage; bonds flat.
- Volcan: Upgraded to B1 with new issuance plans; bonds unchanged.
- SoftBank: Equity -12.8%; bonds -0.50 to -1.0 pts.
- Petroperu: Seeking CESCE waiver ahead of payment deadlines; bonds +1.50 pts (2032s) and +0.25 pts (2047s).
🇨🇳 Asia Credit: China Property & HY
- China/HK HY: Mixed week; China HY +0–0.25 pts with HK credits outperforming.
- Lasu De / HK Credits: LASUDE 26s +4–5 pts on asset sale progress; demand in NWD perps and LIFUNG.
- Vanke: Bonds -4 pts WoW.
- GLP: Curve -1.5–2.0 pts on profit taking.
- Vedanta: Tender and new issuance roadshow; bonds +0.25 pts.
🌏 Asia Credit: Frontier & Sovereign
- Pakistan & Sri Lanka: Bonds +0.5–1.0 pts on lower oil prices.
- Indonesia (Macro): BI hiked rates 25bps; JCI +7.4% on improved sentiment.
- Indonesia (Primary): Danantara issued $1.5bn; sovereigns +0.25–0.5 pts, quasis mixed.
- Indonesia HY: HY -0.25–0.5 pts with INDYIJ and JAPSP outperforming.
www.gembridgecapital.com
DISCLAIMER
This document is strictly confidential and is being provided to you for informational purposes only. It does not constitute an offer to sell or a solicitation of an offer to buy any securities or financial instruments. The information contained herein has been obtained from sources believed to be reliable but is not guaranteed as to accuracy or completeness. Opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice.
AI Generation Notice: Portions of this content may have been generated or assisted by Artificial Intelligence (AI) technologies. Users should independently verify critical data points. Past performance is not indicative of future results.
Executive Summary: Global equity markets sold off sharply Friday on stronger US jobs data, raising Fed hike concerns, while EM aggregate spreads tightened modestly by 2bp with $15.3bn in hard-currency issuance and $0.9bn in fund inflows. Indonesia’s risk assets experienced heavy selling with JCI down 8.7% and IDR above 18,000, while China HY credit closed firmer with most benchmark names modestly higher. CEEMEA dominated by Iran-related headlines as talks halted mid-week following Israeli airstrikes, though Lebanon ceasefire announced and later disputed.
Market Visualizer
Regional Credit Developments
🌍 EM Ex-Asia Credit
- Indonesia: JCI fell 8.7% on the week with USD/IDR moving above 18,000 (all-time low for rupiah). Indonesia IG sovereign and quasi-sovereign USD credit widened 7-8bp, while Indonesia HY USD bonds fell 0.5-1.0pt. Sovereign wealth fund Danantara conducted roadshow for debut USD bonds.
- Colombia: Sovereign USD bonds tightened 30-50bp and ECOPET compressed 50-66bp following first-round presidential election where Abelardo De la Espriella received 43.7% versus Cepeda’s 40.9%. Subsequent poll showed Espriella ahead by nearly 8 percentage points ahead of 21 June runoff.
- Bolivia: 2031 USD bonds fell approximately 1.2pt on week after government declared humanitarian emergency amid opposition blockades estimated at US$2bn economic losses. Multiple cabinet ministers resigned amid demands for President Paz’s departure.
- Zambia: 2053 Eurobonds rallied approximately 2.75pt after government launched partial buyback financed by AfDB and raised tender price to 82.3-84.4pt. Ad hoc bondholder group stated intention to participate.
- Iran: Tehran halted nuclear talks with Washington mid-week following Israeli airstrikes in Beirut. US intercepted Iranian ballistic missiles and drones targeting Kuwait and Bahrain on 3 June. Late in week Iran signaled negotiations could resume under US pressure for weekend deadline.
- Lebanon: Hezbollah and Amal Movement moderated stance on ceasefire with Israel. Israel-Lebanon ceasefire announced Thursday, followed by renewed fire within hours after Hezbollah’s leader criticized deal.
- Romania: President Dan nominated advisor Eugen Tomac as prime minister. Romanian EUR bonds tightened 10-15bp on the day.
- Hungary: Steady real-money and hedge-fund demand in bonds over week following headlines that government expects up to EUR10bn in EU recovery funding by year-end.
- Ukraine: Bonds volatile, selling off mid-week after Rubio signaled poor prospects for Russia-Ukraine deal. Bonds recovered Friday after President Zelensky published open letter to President Putin proposing direct peace talks and full ceasefire during negotiations.
- Senegal: President Faye dismissed Prime Minister Ousmane Sonko and retained Finance Minister Cheikh Diba in cabinet reshuffle. Authorities announced Friday payment arranged for following week’s coupon on FC-denominated bonds. Senegal USD bonds ended week +0.5 to +1.0pt.
- Ethiopia: IMF and authorities reached staff-level agreement on Extended Credit Facility review, making approximately US$468m available upon approval. Ethiopia sovereign bonds unchanged on week.
- Braskem: Reported considering maturity extensions, coupon reductions, and coupon grace periods for FC-denominated bonds. Bonds traded flat to +2pts on week.
- Raizen: Obtained sufficient creditor support for out-of-court restructuring plan. Bonds fell approximately 2.5pts over week.
- Grupo Televisa: Issued MXN-denominated convertible bonds equivalent to US$400m following shareholder approval in April, with stated use for potential M&A in sector. Televisa bonds roughly flat to +1.5pts on week.
- Acelen: Reported 1Q26 EBITDA of US$240m with 2Q EBITDA guidance over US$400m. Management indicated potential buybacks of USD notes toward year-end if cash levels more than sufficient. Bonds up approximately 1.25pts WoW.
- Aeromexico: Published May traffic data with 85.8% load factor. Airline bonds ended week broadly unchanged.
- Volcan: Fitch upgraded from B (Positive) to B+ (Stable) citing strong free cash flow generation. Bonds gained approximately 0.25pt on week.
🇨🇳 Asia Credit: China Property & HY
- China HY: Closed week on firmer tone with most benchmark names modestly higher despite global equity volatility. EM hard-currency spreads tightened modestly over week with EM Agg approximately 2bp tighter and CDXEM44 about 5ct firmer, supported by real-money inflows and local sponsorship with hedge-fund profit-taking and new-issue supply capping rallies.
- GLP: Notable outperformer with curve up around 2-3pts on week following renewed headlines regarding potential GLP China IPO in 4Q.
- VNKRLE: Outperformed with curve up roughly 1.5pts over week.
- Macau Gaming: Underperformed on week. MGM China down approximately 1pt and other Macau names around 0.5pt lower following Barry Diller’s US$12.4bn LBO offer for US-based MGM Resorts. China’s crackdown on illegal cross-border capital flows weighed on broader financial-sector sentiment.
🌏 Asia Credit: Frontier & Sovereign
- Japan Credit: Started week firm but ended mixed as selling interest increased toward latter part of week.
- SoftBank Group: Priced JPY260bn onshore subordinated bonds at JGB +316bp, broadly in line with previous JPY418bn subordinated deal in April. Senior USD bonds finished roughly unchanged to +0.5pt while USD hybrids gained around 1.5pts over week prior to US tech-led sell-off Friday.
- NWD: Bonds unchanged to modestly higher following announcement of advanced talks with Aravest on sale of 50% stake in three Hong Kong hotels for US$1.8bn and ongoing discussions with Hong Kong Airport Authority on cash settlement to terminate obligations related to 11 Skies mall project.
www.gembridgecapital.com
DISCLAIMER
This document is strictly confidential and is being provided to you for informational purposes only. It does not constitute an offer to sell or a solicitation of an offer to buy any securities or financial instruments. The information contained herein has been obtained from sources believed to be reliable but is not guaranteed as to accuracy or completeness. Opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice.
AI Generation Notice: Portions of this content may have been generated or assisted by Artificial Intelligence (AI) technologies. Users should independently verify critical data points. Past performance is not indicative of future results.