Those who are too young to have fully experienced the 1990s have been enjoying the revival of its fashions of late. Baggy jeans, clumpy white Fila trainers, and even the previously much-derided bum bags have all made comebacks.
But to those who wore ’90s fashion the first time around, this renaissance is a weak pastiche at best — a chapter heading missing the rich prose that should follow. Like the Hacienda, Manchester’s legendary ’90s nightclub/rifle range that is now apartments, the building may have the same name, but the structure and contents are very different.
One could take a similarly nostalgic view of the CEEMEA bond market, although not looking as far back as the era that heralded its arrival as an asset class after Communism fell and the world financialised.
CEEMEA bond volumes have rebounded to $219bn-equivalent this year, according to Dealogic data, levels that seem strong. But this is no return to 2021 — the last year of what may pass for normality in the emerging markets.
Those volumes include deals that borrowers would have liked to have done in 2022-2023, had rising rates and the war in Ukraine not locked them out.
Issuers from certain areas remain absent and EM fund flows are weak too.
Year | CEEMEA issuance volume ($bn-equiv., YTD) |
2021 | 212 |
2022 | 98 |
2023 | 145 |
2024 | 219 |
Source: Dealogic | |
Of course, what passes for a normal year is debatable during this era of pandemics, wars, rampant inflation, rocketing interest rates, an energy crisis and sanctions.
In fact, it is extraordinary that volumes are as high as they are, given that Russia and Ukraine accounted for 15% of 2020 issuance but now contribute none.
High yield companies are among the other absentees, while African issuance is half what it was in 2021.
The market is more reliant on a few big issuers: the top five make up 32% of issuance for 2024 — in 2021 they supplied 20%.
This lack of variety is a problem in a market where the prevailing view is that diversification is protection.
Investors are fighting other battles too — net flows into their funds are down around $13bn this year. Crossover money has fuelled order books, but higher yielding, diverse issuance will only return when EM funds do.
Even taking the view that strong numbers provide enough glitter for bankers to keep their jobs and banks to keep servicing these clients, there is still danger. With access restricted for two years, EM issuers turned up in droves in 2024, boosting volumes. But by 2025, they will have been and gone.
The CEEMEA bond market is back. Certainly, it’s not what it was for the original ravers. But more importantly, like all trends, it could vanish as quickly as it returned.