Banks and companies across emerging markets are rushing to international debt markets at the fastest pace in four years, taking advantage of lower borrowing costs as investors demand the smallest premium over U.S. Treasuries since before the global financial crisis.
According to data reported by the Financial Times, issuers outside China have sold at least $250 billion in international bonds between January and July, a pace that could bring 2025’s total close to the $370 billion record set in 2021. Including Chinese borrowers, overall emerging market issuance is projected at about $433 billion, though repayments are expected to exceed that figure, leaving net supply negative so far this year.
The boom comes as global investors grow more confident that U.S. interest rates will decline in the coming months, even as President Donald Trump threatens new tariffs on major developing economies such as India and Brazil. The FT noted that the spread on JPMorgan’s benchmark emerging market corporate bond index has narrowed to below two percentage points over 10-year Treasuries — its lowest since 2007 — underscoring investors’ appetite for higher-yielding debt.
“The market is beginning to price in a more accommodative Fed. Many companies that were on the sidelines are revving their engines,” said Alan Siow, co-head of emerging market corporate debt at asset manager Ninety One.
High-yield emerging market corporate debt has also seen spreads narrow, encouraging even riskier borrowers back into the market. Still, analysts caution that much of the activity reflects refinancing pressure from the pandemic-era borrowing boom in 2020 and 2021.
China, once the largest source of emerging market corporate issuance, has seen international sales decline sharply following its property sector crisis. Borrowers there now rely more heavily on domestic markets, where rates have fallen.
Meanwhile, sovereign issuance has surged. Governments in emerging markets have raised more than $160 billion so far this year, surpassing the record pace set in 2020, according to JPMorgan. Saudi Arabia has been one of the most active issuers, as its government and banks tap markets to offset weaker oil revenues and finance ambitious domestic projects. Mexico also drew attention with a $12 billion sovereign bond to support a partial bailout of state oil giant Pemex.
Despite Trump’s recent tariff threats — including a headline 50 percent levy on imports from India and Brazil — markets remain calm. “These announcements are scary if they come to fruition, but the market is looking through it,” Siow told the Financial Times, pointing to likely exemptions and trade deal protections that would soften the blow.
