Highlights:

• The start of the year has been the best for EM sovereign external debt issuance since the GFC, with $ 50bn issued. Primary market conditions have eased considerably. The success of issuance by low-rated countries opens the door for countries that haven't had access yet. 
• The upcoming issuance will have a limited impact on EM external debt spreads. The long cash position of EM funds, the renewed appetite of US crossover funds and multilateral financing will help to absorb this supply smoothly.
• The easing of primary market access is welcome as EM HYs face a wall of redemptions in the coming years. We estimate that EM HY redemptions and coupons will rise from around $ 75bn in 2023 to $ 94bn.
• The share of ESG bonds in total issuance has been gradually declining. We expect more ESG issuance to come from first-time ESG issuers. However, this will not be enough to significantly increase the ESG share.
   

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