Weekly Updates

• EM fixed income weakened across the principal asset classes, with hard-currency sovereigns returning -1.59%, local-currency debt -1.11% and EM corporates -0.83% at the 2 October mid-day cut-off.
• Long-duration and lower-quality sovereign credit underperformed as 10-year-plus bonds returned -2.66% and HY sovereigns returned -1.86%, versus -0.45% for the 1–3-year segment and -1.29% for IG.
• Dedicated hard-currency EM debt funds recorded US$789m of net outflows, while China-focused and regional local-currency vehicles continued to attract inflows.
• Credit risk widened unevenly, with CDX EM moving 14.9bp wider to 166bp while iTraxx Asia ex-Japan IG widened only 0.6bp to 70bp.
• Primary issuance slowed to US$8.5bn under the broader reported universe, while higher Treasury yields contributed to a postponed benchmark transaction.

Market Visualizer

Global EM Themes

• Global-mandated EM debt funds recorded US$909m of outflows, including US$878m from hard-currency mandates and US$117m from local-currency mandates.
• Regional and country local-currency funds attracted US$3.0bn, including US$3.5bn of ETF inflows, although both figures slowed from US$4.9bn and US$5.9bn previously.
• Hard-currency sovereign returns were -2.27% in Africa, -1.72% in Europe and -0.98% in Asia, while corporate returns ranged from -1.48% in Latin America to -0.28% in Asia.
• Brent hovered around elevated levels of US$100/bbl.

• DM front-end yields rallied 10–30bp while curves steepened approximately 10–20bp, leaving long-duration EM bonds particularly exposed despite the front-end rally.
• September US payroll growth was 29k, prior months were revised down by 60k and unemployment stood at 4.2%, reducing the market-implied probability of an October Fed hike from about 70% to 20%.
• Macro readings were mixed across Asia, with India’s manufacturing PMI rising to 55.1, South Korean CPI easing to 2.9% y/y and Indonesian CPI increasing to 3.28%.

Regional Developments

• MENA high-grade credit widened 22bp over five sessions, while high-beta sovereigns widened 38bp, HY corporates 47bp and AT1/perpetuals 29bp.
• Long-duration Bahrain, Egypt and Jordan sovereign bonds lost 2.5 pts, 4.5 pts and 4.3 pts, respectively, while a short-dated Oman bond gained 0.75 pt.
• Senegal scheduled an IMF-chaired creditor meeting for 6 October covering its economic programme, debt-treatment strategy and engagement timetable, while reiterating that domestic debt remained outside the intended treatment perimeter.
• Angola’s sovereign outlook was revised to positive with its B3 rating affirmed, while projected government debt and interest costs stood at approximately 46% of GDP and 23% of revenue by end-2026.
• South Africa’s first-five-month FY26 deficit narrowed to R188.8bn from R215.2bn as revenue rose 9.5% and expenditure increased 4.6%, although local-market debt returned -2.41% during the week.
• Zambia cut its policy rate by 250bp to 10.75% after inflation eased to 6.1% and opened discussions with the IMF on a successor ECF programme.

• Romania’s 2026 gross financing needs were estimated at RON278.5bn, including a 6.2%-of-GDP deficit and RON150.7bn of maturities, with issuance through end-September covering approximately 52.2% of the requirement before other funding sources.
• Romania’s government-formation uncertainty remained a credit focus after Parliament rejected the proposed government, while local-currency debt returned -2.17%, predominantly through FX.
• Polish headline inflation rose to 4.0% y/y, above the 3.5% upper tolerance limit, although estimated core inflation eased to 3.2% from 3.3%.
• Ukraine recorded a -5.26% weekly hard-currency sovereign return, the second-weakest country performance in the reported sovereign universe.

• Brazil entered the 4 October first-round presidential vote with a statistically tight race, while five-year CDS widened 7bp to 130bp and August unemployment remained at 5.3%.
• Colombia raised its overnight lending rate by 25bp to 12.25% following higher inflation, while five-year CDS widened 14bp to 177bp.
• Chile’s August activity contracted 1.0% y/y and 0.7% m/m as mining fell 10.7% m/m, while five-year CDS widened 8bp to 59bp.
• Mexico maintained its policy rate at 6.50%, with the central bank citing domestic slack and the inflation outlook, while five-year CDS widened 12bp to 101bp.
• Stress intensified in a major Brazilian industrial credit CSN as its 2030 bond fell 8pts to $71, yielding 22.7%, after lower-grade production and cost guidance deteriorated.

• China, Indonesia and Philippines five-year CDS widened 2bp, 4bp and 4bp, respectively, even as the broader regional IG index widened only 0.6bp to 70bp.
• Long-dated Indonesia and Philippines sovereign bonds fell 0.25–0.50 pt early in the week, while Sri Lanka lost 0.5 pt and Pakistan declined a further 0.25–0.50 pt amid selling and thinner bid-side liquidity.
• Corporate performance remained highly dispersed, with several Kazakhstan and Türkiye credits losing 4–5 pts while selected China and Japan-related bonds gained 1 pt.

Primary Markets

• EM credit issuance totaled US$8.5bn, down from US$14.0bn previously, including US$5.5bn of sovereign supply and US$3.5bn of ESG-labelled issuance.
• A narrower external hard-currency universe recorded approximately US$7.1bn across six issuers and nine tranches; differing universes and cut-offs prevent direct reconciliation with the US$8.5bn broader tally.
• A planned benchmark, Marfrig 7/10-year corporate transaction was postponed after higher Treasury yields increased expected borrowing costs, with proceeds originally intended partly to refinance US$467m of 2029 notes.
• Liability-management activity included the announced redemption at par of US$235m of Adecoagro’s 2027 notes and a BRL2.6bn five-year development-bank facility, of which BRL1.3bn had been drawn.
• Ghana’s B-/B sovereign ratings were affirmed with a stable outlook alongside a planned GHS78bn central-bank recapitalisation, while Angola’s B3 rating was affirmed with a positive outlook.

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