Many EMDE sovereign bond markets performed strongly in 2025. Local bond markets proved resilient, whilst the spreads on foreign currency bonds tightened to near all-time lows. Many issuers have continued to develop their local bond markets, prioritising local currency issuance to reduce currency risk, and drawing in new investors to support liquidity. This strong performance has also begun to be reflected in credit ratings, with a general drift higher for EMDEs in 2024 and 2025. However, the picture is mixed between regions and income groups, with larger, higher income EMDEs generally faring better, while the outlook for countries with smaller domestic markets, particularly in the world’s poorest regions, remains challenging.
This session will examine the underlying factors behind the performance of EMDE bond markets overall, as well as the divergence between countries, regions and income groups. It will also assess if this momentum can continue in 2026 and how much is driven by factors outside of EMDEs. The session will also consider the implications of this trend and what further steps sovereign issuers can take to strengthen the resilience of their debt portfolios.
