The GlobalCapital Podcast
News From the Frontier: Africa Leads Emerging Market Bond Revival
Why It Matters
Understanding which regions and sectors can successfully raise capital amid geopolitical turmoil helps investors gauge risk and identify opportunities in a fragmented market. The African‑led revival signals that emerging‑market debt can still attract funding when fundamentals are strong, while the euro‑bank funding slowdown highlights potential liquidity pressures for European lenders if the war‑driven volatility persists.
Key Takeaways
- •Africa issuers revived EM bond market amid Middle East war
- •Angola, Helios Towers, Republika Srpska issued despite sub‑investment grades
- •New‑issue premiums remained modest, showing investor appetite
- •Middle East sovereigns pause issuance until ceasefire or spread normalization
- •European banks favor dollar funding; spreads stay tight despite volatility
Pulse Analysis
The emerging‑market bond landscape saw a surprising lift this week as African issuers stepped back onto the primary market. Angola, a B‑minus oil exporter, Helios Towers, a telecom‑tower specialist, and Republika Srpska, a sub‑sovereign of Bosnia‑Herzegovina, each raised capital despite sub‑investment‑grade ratings. Their deals attracted modest new‑issue premiums—Angola paid roughly 25 basis points on a $2.5 billion raise—signalling that investors remain willing to fund growth‑oriented assets even amid heightened geopolitical risk. This activity marks the first EM issuance since the Middle‑East conflict halted new deals, positioning Africa as the new hub for emerging‑market debt.
In contrast, sovereigns and high‑grade corporates in the Middle East have largely stayed on the sidelines. The ongoing war has driven spreads on previously cheap issuances, such as Abu Dhabi’s five‑year bond, to widen by tens of basis points, eroding the pricing advantage that normally attracts investors. Without a cease‑fire or a clear path to spread normalization, issuers like Saudi Arabia’s banks and sovereigns are deferring new funding, preferring to draw on existing cash reserves. This pause underscores how conflict‑driven volatility can suppress supply even for traditionally low‑cost borrowers, delaying the market’s return to pre‑war liquidity levels.
European banks have responded by shifting a larger share of their funding to the dollar market, where deeper liquidity and relatively stable high‑grade spreads offer more certainty. Despite a 40‑basis‑point rise in U.S. 10‑year Treasury yields since the war began, high‑grade credit spreads have remained flat, making dollar issuance attractive despite higher new‑issue premiums. Meanwhile, the euro market continues to show robust demand, evidenced by large corporate deals and strong order books, but secondary‑tier banks lacking dollar access remain dependent on euro funding. This dual‑currency dynamic creates strategic choices for issuers and investors, balancing cost, spread stability, and execution risk in a volatile global environment.
Episode Description
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◆ Outsiders open EM investors’ wallets ◆ European banks let their hair down in dollar market, still shy in euros ◆ Digital innovation in Frankfurt with DZ Bank
Angola and African telecom company Helios Towers were hardly the issuers anyone expected to restart bond issuance from central and eastern Europe, the Middle East and Africa.
The Middle East war stopped all sales for three weeks, and bankers were looking for a mainstream, investment grade issuer to reopen the market.
But this week it was speculative grade African borrowers — as well as the Serbian republic within Bosnia-Herzegovina — that performed that duty, with successful deals that showed emerging market bond investors are willing to buy.
Although the three issuers were all from the risky end of the spectrum, they are protected from the war’s effects. Whether investors are willing to steer closer to the Gulf’s woes will be tested in the coming weeks.
Another restart happened in euro bonds for European financial institutions. The market has been bare of new issues all month. For a variety of reasons European banks have avoided their home market. Dealmaking picked up this week, with Bank of Ireland showing the way in euros — but most of the action was still in dollars.
Frankfurt is an important node on Europe’s capital market blockchain network, and this week Matthias Bergner, DZ Bank’s group treasurer, joins the podcast to discuss DZ’s latest pilot digital bond, sold to KfW. DZ reckons it is the first bond in which the full lifecycle is on chain.
Digitalising the bond market - sponsored interview with KfW
In an interview on the GlobalCapital podcast this week, KfW's Tim Meirer and Bert Staufenbiel discuss how to move to the next stage in introducing distributed ledger technology to the bond market. They are convinced it can save time, friction, cost and risk.
Interoperability of systems all along the value chain is central to the effort. Meirer and Staufenbiel highlight four essential avenues for progress: open standards, public-private partnerships, modular designs and continuous dialogue.
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