A Wave of Emerging Bond Sales of $331 Billion is Fueled by Yield Hunters

Strong appetite from yield-seeking investors is driving a surge in bond sales from emerging markets, as governments and companies hurry to lock in funding before any potential global market instability arises.

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So far this year, developing nations have issued $331 billion worth of bonds denominated in major foreign currencies like the U.S. dollar and the euro, according to Bloomberg data. This marks the fastest pace of such issuances in four years and has already exceeded the total for the first six months of 2024.

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Investor enthusiasm for global assets has been strong in 2025, as concerns mount over whether U.S. markets will maintain their dominance. These concerns have contributed to a weakening dollar, which has made emerging-market (EM) investments more attractive.

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Major banks, including Bank of America and JPMorgan Chase, have forecast gains for EM assets amid the dollar’s decline. Societe Generale even described the current climate for developing-world local assets as a “goldilocks” environment—just right for growth without excessive risk.

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The yield premium that investors require to hold dollar-denominated debt from emerging nations—compared to U.S. Treasuries—has dropped close to its lowest point since 2020, based on a JPMorgan index. Yet, despite the narrowing spread, demand remains strong because U.S. market spreads have also tightened, limiting more attractive alternatives.

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According to Omotunde Lawal, head of emerging-market corporate debt at Barings Investment Services, this is a clear window of opportunity for issuers. “If you’re a CFO or treasurer, you go when the window is open,” Lawal said. With U.S. fiscal issues keeping Treasury yields elevated, many borrowers view the current moment as an ideal time to raise capital before potential rate hikes push borrowing costs higher.

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Uncertainty over the strength of the U.S. economy is another factor prompting many issuers to move quickly. Stefan Weiler, head of debt capital markets for Central Europe, the Middle East, and Africa at JPMorgan, noted that the incentive to wait has diminished. Should a U.S. recession occur—a scenario JPMorgan estimates has a 40% chance—credit spreads would likely widen, making it more expensive for EM borrowers to tap international markets. “It’s really more about accessing the market when it’s available,” Weiler said.

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This issuance surge began early in 2025, as developing nations recovered from a wave of debt defaults in 2024. Countries including Vietnam and Chile introduced economic reforms that reassured investors. Although the announcement of global tariffs by U.S. President Donald Trump in early April caused temporary market turbulence, sentiment quickly improved when the risk of severe trade restrictions receded. Still, investors remain cautious, as a review of tariff policies looms in early July.

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Despite these concerns, emerging markets have shown resilience. Carmen Altenkirch, an analyst at Aviva Investors, said that “EM has proved to be a comparative safe haven over this period.” She noted that economic fundamentals have steadily improved and that prudent fiscal management is being rewarded by investors.

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A major portion of the bond issuance has come from investment-grade borrowers, who accounted for more than 70% of the total. Mexico set a record with a large deal early in the year, while Saudi Arabia issued $12 billion through a three-part sale. Issuance from China also picked up significantly.

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In the Middle East—home to many investment-grade borrowers—lower oil prices spurred funding needs, and the region is expected to make up over 40% of CEEMEA (Central and Eastern Europe, Middle East, and Africa) bond issuance this year, according to Weiler.

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Latin American companies, many of whom had been absent from offshore markets in recent years, have made a strong return. Adrian Guzzoni, Citigroup’s head of debt capital markets for Latin America, anticipates that the region’s full-year issuance will exceed 2024 levels.

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Even some high-yield issuers, such as Brazil, Peru, and Telecom Argentina, have tapped the market. Kyrgyzstan, in a milestone move, completed its first-ever international bond sale, raising $700 million with demand surpassing $2.1 billion and offering a yield of 8% for its five-year debt.

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However, not all lower-rated countries are able to benefit from current conditions. Samy Muaddi, head of emerging-markets fixed income at T. Rowe Price, explained that higher U.S. Treasury yields, trade-related uncertainty, and soft oil prices are preventing many frontier markets from accessing funding.

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Looking ahead, Morgan Stanley strategists expect several nations—including Poland, Romania, Kuwait, and Kazakhstan—to enter the market soon. Claudia Calich of M&G Investment Management added that Central American countries like Costa Rica and Guatemala might also take advantage of the current window. “If anybody wants to issue, we still have probably a four- to six-week window now,” Calich said. “Otherwise, you have to wait until September.”

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