BofA Global Research expects hard-currency sovereign bond sales from emerging Europe, Middle East and African (EEMEA) region to hit $109 billion this year, accounting for the bulk of bond issuances expected in emerging markets.
EEMEA governments will account for about 65% of the total supply of EM sovereign debt this year, BofA projected in a note dated Tuesday, following bond sales from the region amounting to $116 billion last year.
In November, Barclays forecast bond supply from the EEMEA region to reach $75 billion in 2025.
Emerging market countries and companies have issued a flood of bonds so far this year topping $55 billion, the most in years, as borrowers rush to lock in cash before the potential tumult of the second Donald Trump administration in the United States.
BofA warned that risks for a downgrade to Romania’s sovereign credit rating, which are currently “BBB-” rated, have risen.
Ratings agency Fitch cut Romania’s credit outlook to negative last month, saying uncertainty following the country’s now voided presidential election was likely to have a “significant adverse effect” on fiscal consolidation.
In neighbouring Hungary, confidence in the country’s policy discipline remains low among investors and rating agencies, said BofA, leaving the Hungarian forint volatile and credit ratings more vulnerable to downgrades, but added that “this is not justified by fundamentals.”
For Turkey — one of the heaviest issuers in emerging markets — BofA expects a lift to its sovereign credit rating in late 2025 or early 2026 on bets of easing inflation and fiscal deficit. In November, S&P Global raised Turkey’s sovereign credit rating to “BB-” from “B+”.
Falling global interest rates usually pave the way for higher bond issuance from lower-rated emerging market governments, whose borrowing costs in hard currency are tethered to U.S. interest rates.
The Wall Street brokerage also saw potential credit rating upgrades to Morocco, Oman and South Africa. (Reporting by Siddarth S in Bengaluru; Editing by Alan Barona)
