Weekly Report

Executive Summary: EM credit markets ended the week firmer despite midweek volatility from US-Iran tensions, FOMC uncertainty and Middle East geopolitical risks. Most EM central banks remain on hold through end-2026, with key developments including Bolivia’s US$1.9bn IMF Extended Fund Facility agreement, Egypt’s US$1.8bn IMF disbursement, Gabon’s US$920m bond issuance with debt audit findings showing lower levels than previously reported, and divergent monetary policies in Eastern Europe with Ukraine raising rates 50bp and Kazakhstan cutting 25bp. Asia credit traded cautiously with IG spreads widening 4bps and HY prices down 0.25-0.5pts, while Hong Kong property names outperformed on liability-management exercise expectations.

Market Visualizer

*Weekly Snapshot: Key Drivers & Regional Flows*

Regional Credit Developments

🌍 EM Ex-Asia Credit

• Egypt: IMF approved a review and disbursed about US$1.8bn. Egypt continues progress toward a more credible inflation-targeting framework with greater exchange-rate flexibility relative to prior years.
• Lebanon: Finance and Budget Committee approved key articles of the draft banking reform law on 29 July. LEBAN bonds rallied about 1.625pts week-on-week as investors boosted hopes for eventual IMF support.
• Nigeria: notes monetary transmission issues with liquidity conditions influenced more by the Standing Deposit Facility than the policy rate. Nigeria attracted demand as a higher-yielding oil exporter and is viewed as relatively insulated from short-term Fed rate moves.
• Angola: Remains among frontier credits benefiting from elevated commodity prices and relatively high real interest rates.
• Ghana: Benefited from renewed financing plans linked to cocoa-sector funding, supporting demand for its sovereign risk.
• Gabon: Issued a new US$920m 7-year 2033 bond via private placement at yield-to-put of 12.65%, rallying 2pts on the day. Preliminary audit findings indicate recorded outstanding debt levels are expected to decrease significantly. IMF staff visit scheduled for September 2026 with view to reaching staff-level agreement for program start in early 2027.
• Bahrain: Underperformed within GCC as investors focused on large financing needs and fiscal vulnerabilities, though GCC credits overall remained relatively resilient amid heightened US-Iran tensions.
• Ukraine: Central bank raised policy rate by 50bp during the month in response to domestic inflation pressures. Market remained under pressure from continued Russian attacks on port infrastructure.
• Kazakhstan: Cut policy rate by 25bp, bringing cumulative easing in 2026 to 125bp. Country remains exposed to commodity-market disruptions and global oil-price volatility.
• Georgia: Adopted a more hawkish monetary-policy stance and implemented institutional reforms aimed at strengthening central-bank credibility.
• Romania: Parliament approved several bills that help unlock around 3 billion euros in EU recovery funds crucial for meeting 2026 budget-deficit goal. ROMANI USD/EUR bonds tightened 10bps with cash prices flat to +0.75pts over the week.
• Armenia: Moody’s changed sovereign outlook from Stable to Positive, citing reduced political risks, lower probability of large-scale hostilities with Azerbaijan, more diversified external relations and contained domestic political risks. ARMEN bonds were down 0.375pts week-on-week.
• Bolivia: Reached staff-level agreement with the IMF for a US$1.9bn Extended Fund Facility over 36 months. IMF expects the program could catalyze more than US$5bn in additional multilateral financing over the life of the program. Key reform pillars include fiscal consolidation, increased exchange-rate flexibility, zero central-bank deficit financing and enhanced monetary-policy credibility.
• Argentina: Recovered strongly during the week with sovereign CDS tightening into Friday as investors re-engaged in LatAm risk.
• Brazil: Recovered strongly during the week with sovereign CDS tightening into Friday as investors re-engaged in LatAm risk.
• Mexico: Recovered strongly during the week with sovereign CDS tightening into Friday as investors re-engaged in LatAm risk.
• Dominican Republic: Recovered strongly during the week with sovereign CDS tightening into Friday as investors re-engaged in LatAm risk.
• Colombia: Benefited from real-money demand, supporting sovereign performance during the week.
• Ecuador: Negotiating up to US$1.3bn in additional IMF financing via the Fund’s climate-lending facility, following earlier discussions in 2024 during a severe drought that affected electricity generation. ECUA bonds were down about 1.0pt week-on-week.
• Uruguay: Pursuing targeted pension-system reforms. Current proposals maintain the existing pension architecture while allowing earlier retirement, which authorities and analysts are assessing for long-term sustainability implications.
• Aegea: Shareholders approved a BRL2.1bn capital increase at extraordinary general meeting. AEGEBZ bonds were flat to +0.50pts week-on-week.
• CSN: Launched a debt-exchange and consent-solicitation offer for its 2028 bonds. CSNABZ bonds traded 0.625pts to 4.0pts higher over the week.
• GOL Linhas Aéreas: Fitch upgraded from CCC+ to B- with Stable outlook. GOLLBZ bonds were up around 1.50pts week-on-week.
• Raízen: The 3rd Bankruptcy and Judicial Reorganization Court of São Paulo approved Raízen’s extrajudicial restructuring plan on 30 July 2026, making the reprofiling of about R$61.4bn of unsecured financial debt effective and binding on covered creditors. RAIZBZ bonds were up about 0.50pts week-on-week.

🇨🇳 Asia Credit: China Property & HY

• Faecao: Perpetuals traded up about 3pts on the week, supported by market focus on a potential liability-management exercise.
• Lasude: New 8% 2029 bond issued via exchange post-LME, opened around US$89 and closed the week at about US$94 at 10% yield.
• Nwdevl: Perpetuals were up around 1pt and senior bonds gained about 0.5pt as the market awaited a potential repackaging deal.
• Binghatti: Reported 2Q26 results showing declines in non-escrow cash levels and undrawn credit facilities. BINHLD bonds fell by about 8 to 9pts over the week.

🌏 Asia Credit: Frontier & Sovereign

• Pakistan: S&P upgraded long-term rating from B- to B. Pakistan is seeking about US$10bn in funding from the US to boost reserves. Sovereign curve closed around -25cts to +12.5cts on Wednesday but ended the week around -50cts to -1.63pts lower overall due to hedge-fund selling versus real-money two-way activity. Pakistan previously implemented 100bp policy-rate increase in response to inflation pressures and continues to highlight the country’s fiscal discipline compared with other frontier markets.
• Sri Lanka: Frontier sovereign long-end underperformed during the week. Sri Lanka previously implemented 100bp policy-rate increase in response to inflation pressures and highlights the country’s fiscal discipline compared with other frontier markets.
• Vietnam: Policymakers are balancing currency stability, domestic liquidity conditions and strong credit growth.
• Bangladesh: Cut policy rate by 50bp despite inflation remaining above target.
• EDF-Generation Public Co (Laos): Laos SOE utility is meeting investors for a debut US dollar RegS/144A 5NC3 transaction with expected issue ratings of CCC+ from S&P and CCC+ from Fitch.
• Malaysia: Priced two-tranches sukuk: US$850m 5.75-year at T+15 and US$650m 10-year at T+25. Secondary market widened 1-2bps versus reoffer due to weak macro.
• Danatara (Indonesia SWF): Back in the market for potential 20-year and 30-year issuance, adding to existing 5-year and 10-year issued in June 2026.

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.

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