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Bond Market News
EM Sovereign Dollar Bonds End 2025 on a Strong Footing
December 22, 2025
Emerging and frontier market sovereign dollar bonds were among the top gainers yet again in 2025, delivering a total return of 11%, extending their gains from 2024 where they rallied by 7%. The top performers included dollar bonds of Pakistan, Sri Lanka and the Maldives from the APAC region; Egypt, Nigeria and Kenya from the MENA region and; Bolivia, Ecuador and Colombia from LatAm.
In the LatAm regions, the top gainers were led by Bolivia’s dollar bonds that rallied by over 53% after the nation elected centrist Rodrigo Paz as president in addition to negotiating multilateral financing exceeding $9bn for public and private projects. Ecuador’s dollar bonds jumped higher by over 43% after after President Daniel Noboa won the election, thereby securing a full four-year term. Besides, the nation also reached a staff-level agreement with the IMF to augment its existing facility from $4bn to $5bn.
In the EMEA region, Belarus’ dollar bonds also rallied by over 50% during the year. Besides, Egypt’s dollar bonds rose over 19%, helped by several factors — first, it signed a strategic partnership agreement with France, followed by the IMF approving $2.5bn in financing and then and upgrade to B from B- by S&P. Zambia’s dollar bonds also rallied by nearly 19%. The only notable loser across the entire space were dollar bonds of Senegal amid liquidity and debt restructuring concerns following the IMF delaying financial assistance.
Moving towards Asia, Pakistan’s dollar bonds rallied by 19% after it reached a staff-level agreement with the IMF for a new loan facility, that was followed by rating upgrades. Maldives rallied by over 17% thanks to securing an $8.8bn investment from Qatar, and Nigeria over 15% after repaying a $3.4bn IMF loan alongside rating upgrades.
In the interactive table below, we have compiled the dollar bonds of these EM sovereigns with a maturity closest to the 5Y tenor as we have observed investors’ interest in this maturity bucket. You can click on the region to view the bonds represented as dots. The table can be sorted by Yield, Price, Returns, Bond or Amount Outstanding by clicking on the column header. The returns of each bond can be see by hovering over the green bar.
Outlook on EM Sovereign Bonds for 2026
Looking into 2026, asset managers continue to stay positive on EM sovereign debt:
Vanguard – we believe a broad exposure to EM sovereigns offers investors a better chance of long-term investment success, providing better valuations, higher liquidity and improving fundamentals when compared with EM corporates…. EM sovereigns offer a better liquidity profile… Since 2008, EM sovereigns that have entered default typically had higher recovery rates (56%) compared with EM corporates (34%).
Pictet Asset Management – Emerging markets (EM) have arguably proved to be the biggest surprise of 2025 in financial markets…We like reform stories in countries like Argentina (where President Javier Milei’s party secured a landslide victory in midterm elections last month, opening the door for more positive changes), Nigeria and the Ivory Coast.
Vontobel Asset Management – Rating upgrades, inflows, and elevated risk appetite continue to propel EM hard currency bonds… Looking ahead, we remain confident that risk assets, including EM fixed income, will perform well in 2026. Although valuations are less attractive than they were six months ago, several factors support our optimism… Argentina and Ecuador are expected to regain market access in 2026, with spreads likely converging toward the average for B-rated sovereigns. Relative value opportunities also exist among less risky BB-rated countries such as Ivory Coast, the Bahamas, Uzbekistan, and Turkey.
Schroders – High-yield emerging market bonds denominated in US dollars continue to offer attractive income opportunities, supported by improving credit fundamentals and renewed investor interest in the sector. Over the next 12 months, we expect total returns to exceed 7.5%, driven largely by their strong income potential (or “carry”). The most attractive opportunities remain in countries such as Argentina, Ecuador, Angola, Ivory Coast and Egypt.
Fidelity – While the EM trade has been talked about all year, the money, in bulk, has yet to arrive. This sets the scene for 2026, where we see the possibility of much greater allocations into emerging market debt on the back of 2025’s strong returns and continued cheapness in many places.
William Blair – Emerging markets (EM) debt enters 2026 with its momentum intact, supported by the same forces that powered a strong 2025… macro backdrop remains constructive, with EM economies showing stable fiscal dynamics, healthier external accounts, and moderating inflation that gives central banks room to ease… we believe EM debt is positioned to deliver another year of solid performance, with opportunities spanning hard and local currency (including frontier markets) debt.
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