EM debt rush

Emerging market borrowers are rushing to tap global debt markets at the fastest pace in at least a decade, taking advantage of a brief risk-on window before a possible return of volatility to the market, Bloomberg reports. More than USD 27 bn worth of issuances were priced last week alone, including sales from Saudi Arabia, Brazilian oil giant Petrobras, and Turkey’s sovereign wealth fund.

The surge has pushed YTD EM issuances to nearly USD 511 bn — the busiest similar time period since 2021. JPMorgan now forecasts a record year of nearly USD 240 bn in sovereign issuances, with September already logging USD 8.5 bn — more than half the average for the month. Even Brazil, which typically relies on local markets, has tapped global markets three times this year.

Investor appetite has been outsized: Saudi Arabia’s USD 5.5 bn sukuk drew USD 17.5 bn in orders, while Turkey’s USD 1 bn sale was 10x oversubscribed. Demand has narrowed EM risk premiums, with the extra yield over US Treasuries falling to 298 bps on average — the tightest since 2019, according to JPMorgan’s gauge. The strong appetite shows investors are “preemptively anticipating some volatility,” said Aayush Sonthalia of PGIM Fixed Income.

This backdrop has lured steady inflows into EM-dedicated debt funds for 20 consecutive weeks, totaling USD 1.9 bn in the week ending 3 September, EPFR data shows. Local currency debt is up 13% this year, with USD-denominated bonds up by more than 8% — both outpacing developed-market debt returns of 6.5%.

Still, strategists warn the window may be short-lived. Persistent inflation, heavy sovereign borrowing, and political instability in core markets from the UK to Japan are unsettling global bonds, raising the risk that higher US yields will push up EM borrowing costs.

More agreements are in the pipeline: Saudi Aramco is preparing a USD sukuk this month, and Mexico may issue up to USD 10 bn to fund a Pemex bond buyback — with Indonesia, Kuwait, Oman, and Nigeria all expected to follow by year-end.

MARKETS THIS MORNING-

Equity markets in Asia are firmly in the green this morning, maintaining gains on the back of Japan’s prime minister stepping down over the weekend, and tracking a positive day for US tech stocks yesterday. Japan’s Nikkei hit an all-time high yesterday and is up in early trading, while the Shanghai index is trading flat.

Over on Wall Street, markets are on track to follow suit and open in the green, after the tech-heavy Nasdaq, the Dow Jones, and the S&P 500 all closed up yesterday.

THE CLOSING BELL: TADAWUL-

The TASI inched down 0.9% yesterday on turnover of SAR 4.4 bn. The index dipped 12.8% YTD.

In the green: Lazurde (+6.1%), Al Masane Al Kobra Mining (+3.7%) and Ataa Educational (+3.5%).

In the red: Thimar (-10.0%), Saudi Real Estate (-6.2%) and Saudi Cable (-5.5%).

THE CLOSING BELL: NOMU-

The NomuC closed 0.7% yesterday on turnover of SAR 43.1 mn. The index was down 19.5% YTD.

In the green: Meyar (+29.8%), Taqat (+9.0%) and Multi Business (+6.4%).

In the red: Sign World (-10.9%), Al Battal Factory (-9.9%) and Riyadh Steel (-9.1%).

CORPORATE ACTIONS-

ChubbArabia Cooperative Insurance got the Capital Market Authority’s greenlight to boost its capital by SAR 100 mn to SAR 400 mn, the authority said in a statement. The move will raise the number of shares to 40 mn from 30 mn by issuing one bonus share for every three shares held. Chubb will fund the transaction by transferring SAR 52 mn from retained earnings and SAR 48 mn from its statutory reserve.

Saudi Reins.Company was cleared by the Capital Market Authority for a SAR 539.8 mn capital hike via a bonus share issuance, the authority said in a statement. The move will raise the number of shares to 169.8 mn from 115.8 mn by issuing four bonus shares for every nine shares held, fully funded by the company’s retained earnings.

SaudiNetworkers Services’ board approved a 25% capital increase to SAR 75 mn via a bonus share issuance, it said in a Tadawul disclosure yesterday. The SAR 15 capital increase will be funded from the outfit’s retained earnings with shareholders receiving one bonus share for every four shares held. The move is pending regulatory approval.

ALSO- The board nodded to a SAR 12 mn dividends payout for 1H 2025 at SAR 2 apiece, starting on Thursday, 25 September, according to a separate Tadawul disclosure.