Ex-Asia EM credit traded in a defensive but functional market backdrop during the week, with primary issuance remaining open while secondary flow turned more selective. Geopolitical headlines dominated price action: President Donald Trump said a planned US strike on Iran was put on hold after requests from Gulf leaders, and mediated talks continued through the week around draft proposals, with no formal agreement announced.

Ex-Asia EM credit

Activity in ex-Asia EM credit was shaped by geopolitical headlines rather than a broad deterioration in market access. The primary market remained open, while secondary trading was more defensive, with investors focused on domestic political risk and idiosyncratic credit events.

CEEMEA

Turkiye was the clear underperformer. A Turkish court annulled the CHP’s 2023 congress, effectively removing Ozgur Ozel and reinstating the prior party leadership. Turkish assets sold off following the ruling, and the central bank was reported to have sold billions of dollars in FX reserves to steady markets.

Romania’s pro-European coalition collapsed following a no-confidence vote, extending a period of political instability. In frontier CEEMEA, Kenya came under pressure early in the week after protests over fuel price increases left four people dead; the government subsequently moved to cut diesel prices and secured a suspension of the public transport strike.

Ukraine traded firmer on the back of military and policy headlines. The US Defense Intelligence Agency said Ukraine had retaken approximately 400 square kilometres this year after Russian-operated Starlink terminals were deactivated, and the US State Department approved a possible US$108 million foreign military sale for Hawk missile system sustainment and related equipment.

MENA

MENA investment-grade tone was relatively constructive. Egypt’s central bank held its overnight deposit rate at 19% and lending rate at 20%, leaving policy unchanged this week. Saudi sovereign cash bonds were comparatively resilient amid rotation within the Gulf complex, and Lebanon cash trading saw firmer tone over the week.

Sub-Saharan Africa

Angola raised US$1.5 billion through a dual-tranche Eurobond deal, with notes maturing in 2031 and 2037 priced at 8.25% and 9.5% respectively. Secondary flow across Sub-Saharan Africa was generally skewed to selling, particularly in higher-beta names.

After Friday’s close, Moody’s changed South Africa’s outlook to positive while maintaining the Ba2 rating.

Latin America

Latin American sovereign credit traded broadly range-bound during the week. Mexico was the main ratings event: Moody’s downgraded the sovereign to Baa3 from Baa2 and changed the outlook to stable from negative, citing weakening fiscal strength and constraints related to debt stabilisation.

Brazilian political headlines remained in focus, while sovereign spread moves were relatively contained compared with the sharper moves in corporates and quasi-sovereigns. In Peru, polling for the presidential runoff showed a modest lead for Keiko Fujimori over Pedro Sanchez.

At the corporate level, Moody’s downgraded Brazil’s CSN to Caa1 from B2 with a negative outlook maintained, citing expectations of weak credit metrics and elevated distressed-exchange risk. Moody’s and Fitch each took negative rating actions on Amaggi following the company’s announcement of the acquisition of a 40% stake in FS Industria de Biocombustiveis; bond price reaction was limited by week-end.

Mexican financials were volatile after market chatter around possible US sanctions on a large Mexican financial institution prompted selling across parts of the bank capital structure, with some stabilisation later in the week. Regional airline credits traded firmer after April traffic data from Abra Group carriers Avianca and Gol showed capacity and demand growth, in line with figures already reported by Latam Airlines and Aeromexico.

Other market developments

Outside EM sovereign credit, AI-linked equities and select credit moved higher during the week. Bloomberg reported that OpenAI is preparing to file for an IPO in the coming weeks and is targeting a fall listing. ARM Holdings rallied sharply following Nvidia-related news, and SoftBank shares and long-dated hybrid bonds also moved higher.

Ratings monitor

Core sovereign rating profiles across major Gulf and Central European names were unchanged on the week outside the actions above.