As of January 21, 2025, emerging-market bond issuers are facing significant challenges in attracting investors due to rising U.S. Treasury yields, which have surged since Donald Trump's re-election on November 5, 2024. The yield on the 10-year U.S. Treasury bond has increased dramatically, contributing to a cautious investment environment [3ecd4049].
Despite these challenges, Eurobond market sales reached $34 billion in January 2025, reflecting a 12% increase from the previous year. Investment-grade borrowers, including countries like Saudi Arabia, Mexico, and Slovenia, have dominated the issuance landscape [3ecd4049]. Notably, Benin managed to raise $500 million despite its lower credit ratings, showcasing some resilience in the market [3ecd4049].
However, the situation is less favorable for junk-rated issuers, who saw sales decline by 7% to $6 billion, marking the slowest start to the year since 2020 [3ecd4049]. The average yield on emerging-market dollar bonds has risen by over 40 basis points to approximately 6.84%, with single-B rated issuers experiencing a surge of 54 basis points in yields [3ecd4049].
Investor sentiment is being further impacted by concerns over U.S. economic policies under President Trump, particularly regarding potential tariff hikes that could exacerbate borrowing costs for emerging markets [3ecd4049]. In response to these pressures, some countries are exploring alternative financing options. For instance, Angola secured a $1 billion loan from JPMorgan Securities, indicating a shift in strategy among emerging market borrowers [3ecd4049].
The broader context includes a sharp sell-off in bond markets following Trump's victory, with the yield on the 10-year U.S. Treasury bond rising from 3.6% to nearly 4.8% [9a8282cb]. This increase has occurred despite the Federal Reserve's easing cycle, which began in response to economic pressures [9a8282cb].
Emerging-market bond sales in 2025 are thus navigating a complex landscape, with high U.S. Treasury rates creating a challenging environment for both investment-grade and junk-rated issuers. The market's response to these developments will be closely watched as the year progresses, particularly in light of upcoming economic indicators and the evolving political landscape [3ecd4049].