Emerging-Market Funding Gets Creative as Dollar Bonds Dry Up

Debt-for-nature deals, loan syndication become popular routes
Local-currency bond sales surge as high rates lure investors

WATCH: Outflows from ETFs tracking Chinese equities continue despite Beijing’s measures to boost sentiment. Emerging Market ETFs, as a whole, also seeing a third consecutive week of outflows. Carolina Wilson reports.Source: Bloomberg

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By Selcuk Gokoluk and Colleen Goko-Petzer

August 27, 2023 at 12:00 PM UTC

Updated on

August 28, 2023 at 7:00 AM UTC

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At the BRICS summit in Johannesburg this week, a key item on the agenda was reducing dollar dependence across emerging markets. In bond sales, it’s already happening.

The sale of dollar bonds from developing countries sunk to the lowest since 2021 in August as global yields spiked to multi-year highs and 15 emerging nations traded at distressed levels. Only $1.4 billion has been raised in emerging debt this month, compared with $4.5 billion in August 2022 and average monthly sales of $15.4 billion this year.