Governments in emerging markets are selling foreign currency bonds at a record pace this year despite rising global interest rates and a revival in the US dollar, as sovereigns shrug off the Iran war or borrow to fund the cost of its impact. A $10bn flurry of emerging-market borrowing this month has brought Saudi Arabia and Qatar back to public dollar bond markets for the first time since the start of the war and lifted total sales of EM sovereign debt to about $200bn so far in 2026. Turkey, Kazakhstan and the Dominican Republic are set to issue dollar and euro bonds this week.

Governments issued a record $190bn in the eight months to August, eclipsing the $160bn sold in the same period last year, according to the Institute of International Finance. Jonathan Fortun, a senior economist at the IIF, said the asset class of emerging markets is starting to be perceived as much safer than it was. Yields on 10-year US Treasuries have risen sharply this year to around 5 per cent, threatening to suck cash out of riskier debt markets.

But the yield premium that EM foreign currency bonds offer over US Treasuries has stayed relatively low, with a benchmark JPMorgan index trading at a spread of about 2.2 percentage points, down from about 2.6 percentage points a year ago. Investors said global economic growth had stayed strong despite high oil prices resulting from the Iran war, bolstering demand for bonds from developing nations that are the most geared to global trade. Yvette Babb, portfolio manager at William Blair Investment Management, said the global macro picture is extremely resilient even for countries such as Egypt that have been in the thick of this.

Of this year’s total issuance, Fortun said, only $72bn will be “new” money — countries raising more money from bondholders rather than refinancing maturing bonds — reflecting rising interest costs as the volume of debt has grown. About a third of the total is set to be issued in euros, up from a quarter in 2024, as countries have switched out of the dollar in search of cheaper interest rates. They have also sought more generally to diversify their currency exposure, resulting, for example, in this year’s record issuance of debt in Chinese renminbi.

Qatar sold $3bn of five-year and 10-year bonds this week at yields of 5.3 to 5.5 per cent in its first debt sale since a wartime private placement in April. Saudi Arabia sold just over $3bn in dollar-denominated sukuk, an Islamic form of debt, earlier this month.