EM Sovereign Debt: Restructurings, IMF, Eurobonds — 2026-09-24
Argentina's country risk climbed for an eighth straight session to a five-month high of 566 bps as it prepared an $803m payment to the IMF, while Pakistan launched IMF program review talks in Islamabad with a $1.2bn tranche in play. EM investors rotated toward local-currency bonds as surging US Treasury yields dimmed the appeal of dollar debt. Lebanon and the IMF moved toward laying groundwork for a debt restructuring.
EM Sovereign Debt: Restructurings, IMF, Eurobonds — 2026-09-24
Top developments
Argentina pays IMF $803m as bond selloff deepens
On Friday September 25 the Argentine government must pay the IMF the equivalent of USD 803 million, using central bank dollars to buy SDRs that will be "recovered" with a pending IMF disbursement. Country risk rose for an eighth consecutive day to 566 bps — the highest since April — with dollar bonds losing 1.1% and the BCRA buying just USD 6 million while reserves fell nearly USD 500 million. Rising US rates — the 10-year Treasury above 5% — plus 2027 election uncertainty are driving the pressure. The deterioration threatens San Juan province's planned USD 600 million Eurobond, which could price near 10% annually.
Pakistan: IMF review talks open, $1.2bn tranche in sight
IMF negotiations with Pakistan began this week (Sept 23), with up to USD 1.2 billion likely under the next tranche and an additional USD 200 million expected for climate financing; authorities targeted reserves above USD 17 billion. The mission started technical talks at the State Bank covering tax targets, power tariffs and circular debt. Separately, Pakistan's external borrowing rose 23.6% year-on-year to USD 1.7 billion in the first two months of FY2026-27, while Eurobond inflows pushed total FX reserves above USD 26.79 billion, a record.
EM investors favor local bonds as dollar debt lags
Bloomberg reported (Sept 20) that emerging-market investors are sticking with local-currency sovereign debt as surging Treasury yields dim the appeal of dollar-denominated developing-country bonds — a headwind for Eurobond markets broadly. Meanwhile Nigeria's 2036 Eurobond yield has fallen more than one percentage point over the past year despite higher US rates.
Lebanon moves closer to IMF-backed debt restructuring
Lebanon and the IMF are paving the way for a debt restructuring: public debt stands around USD 46.3 billion, or 139.4% of GDP as of end-2025. This marks a significant step for one of the longest-running restructuring sagas in EM.
IMF panel flags gaps in program design; debt sustainability framework overhauled
The IMF and World Bank approved a reform package updating the debt sustainability assessment framework for low-income countries to better monitor debt risks under changing borrowing patterns. Financial press also identified three key gaps in IMF programs: fiscal policy credibility, contingency plans, and program ownership.
Local view
Spanish-language media in Argentina emphasize the political dimension: Infobae notes that the dollar-linked debt swap cleared immediate maturities, but falling sovereign bonds and rising country risk reflect investor caution ahead of 2027 elections and an adverse external environment — "the market is more focused on politics than economics". Mexican outlet El Economista pegged country risk at ~552 bps, its highest since early May, citing external geopolitical risks and domestic pre-election doubts. In Egyptian Arabic media, the IMF's Egypt mission chief Amin Mati praised the economy's resilience against geopolitical tensions but said more reforms are needed, with Al-Sharq al-Awsat reporting the economy absorbed the regional shock better than expected thanks to improved reserves and FX flexibility.
Context & numbers
- Argentina country risk (JPMorgan EMBI): 566 bps on Sept 23, an eight-day run and highest since April; bonds -1.1%; BCRA bought only USD 6 million, reserves down ~USD 500m
- Argentina IMF payment due: USD 803 million equivalent
- Pakistan IMF tranche: up to USD 1.2bn under review, plus USD 200m expected for climate
- Pakistan FX reserves: above USD 26.79 billion after Eurobond inflows
- Lebanon public debt: ~USD 46.3bn, 139.4% of GDP (end-2025)
- Egypt: ~5% growth per IMF commentary; IMF praised State asset-exit plans as needing acceleration
On the radar
- Argentina's weekly risk trajectory: 2027 election uncertainty, ongoing IMF review and a paused bond sale were all flagged as drivers of the six-session early climb to 533 bps
- San Juan province's USD 600m New York-law Eurobond placement — pricing near 10% would be a bellwether for Argentine subsovereign market access
- Conclusion of Pakistan's IMF technical negotiations at the State Bank (tax targets, power tariffs, circular debt) — a positive review would unlock the USD 1.2bn tranche
- Lebanon's debt restructuring groundwork with the IMF — next steps after the IMF-Beirut push toward a deal
This content was collected, curated, and summarized entirely by AI — including how and what to gather. It may contain inaccuracies. Crew does not guarantee the accuracy of any information presented here. Always verify facts on your own before acting on them. Crew assumes no legal liability for any consequences arising from reliance on this content.
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