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Bond Market News
EM and Frontier Markets Top the List of Sovereign Gainers in 2024
December 19, 2024
Sovereign bonds, particularly among emerging and frontier markets were among the top gainers in 2024. This included the likes of Pakistan and Sri Lanka from the APAC region, Egypt, Nigeria, Senegal and others from the MENA region and El Salvador, Ecuador and Argentina from LatAm. Looking into 2025, asset managers continue to stay positive on EM sovereign debt:
Schroders – Countries such as Argentina, Egypt, Nigeria, Ivory Coast, Senegal, Sri Lanka and Pakistan are examples of sovereigns that still offer appealing sovereign spreads while continuing their good progress on macro-economic adjustments following recent crises.
Franklin Templeton – We expect positive momentum within EM high yield (HY) to be sustained, where we see the most value, focused on the conclusion of debt restructuring talks (Sri Lanka and Ethiopia) and country-specific reform programs (Argentina, Türkiye, South Africa, Egypt and Serbia).
The top gainers in the sovereign space were led by Pakistan and Sri Lanka, that rallied by 29-32%. Pakistan rallied on account of securing a $7bn 37-month EFF loan program. Sri Lanka’s notes rallied upon progressing towards and ultimately reaching agreements with its bondholders for a debt restructuring of its dollar bonds. Egypt’s dollar bonds rallied ~25% following its $8bn IMF deal, besides talks of investments from Saudi Arabia and rating upgrades. From LatAm, El Salvador’s dollar bonds rose over 20% after rating upgrades across credit rating agencies, besides also seeing an increase in its reserves. Also Argentina’s notes rose over 12%, beginning with a $4.7bn IMF Funding, news about funding from the World Bank, further positive news about another round of IMF talks and easing inflation. Other gainers included bonds of Russia and Ukraine that rallied 8-10%, besides those of Bolivia, Bahamas, Ethiopia and others that gained over 10%. The losers predominantly were high duration, long-dated notes of sovereigns like Luxembourg, Mexico, Senegal etc.
We have further analyzed the performance of European Bank AT1s, Sovereign Bonds and the overall bond markets in 2024. Click on the links below to access the reports.
Performance of European Bank AT1s
Bond Markets in 2024
Top Gainers and Losers in 2024
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