According to reports from the Intelligent Finance and Economic APP, borrowers in developing countries are strengthening their defenses against volatility, issuing more bonds in the first five days of September than in the same period in previous years. Data compiled by Bloomberg shows that as of last Friday, the issuance of bonds by emerging market governments and enterprises reached $28 billion, far exceeding the $12 billion in the same period last year.

Many issuers are trying to issue bonds before the November U.S. presidential election and another growth panic similar to August 5. In early August, panicked investors sold off a variety of assets, from emerging market currencies to Japanese stocks. According to JPMorgan's indices, this led to the longest period of rising borrowing costs for sovereign borrowers in emerging markets in about six years.

Alexander Karolev, head of bond syndicate for JPMorgan's Central and Eastern Europe, Middle East and Africa (CEEMEA) region, said: "Most issuers chose to enter the market before the potential volatility, which is very wise. Due to risk events, issuance in the coming weeks will decrease significantly."

Bloomberg's U.S. dollar-denominated government bond and corporate bond indices show that the yields of issuers in emerging markets are still at their lowest levels in two years, averaging 6.5%, which means they can enter the primary market.

Many companies have already met their financing needs for this year, and investors are also willing to meet these needs before further interest rate cuts reduce yields. The Abu Dhabi National Oil Company, Indonesia, and Uruguay were the focus of last week's trading.

A surge in bond issuance in emerging markets.

As data shows mixed results for the U.S. economy, there is increasing demand for the Federal Reserve to adopt aggressive easing policies at its meeting later this month. Friday's employment report showed slower-than-expected job growth in the United States. Indicators measuring U.S. interest rate volatility indicate that there will be turbulence in the future.

Nick Eisinger, Co-Head of Emerging Market Fixed Income at Vanguard Asset Services Limited, said: "The significant economic slowdown is clearly unfavorable for emerging markets. Now is a good time to continue issuing bonds."

The US dollar, due to its size and trading convenience, has become the most popular currency choice for hedging volatility. Transactions conducted in US dollars this year are even more popular, far surpassing those conducted in euros and other hard currencies.

Last week, US dollar-denominated transactions accounted for 86% of the issuance, compared to an average ratio of 78% in 2023. This makes it even more important for emerging market issuers to deal with twists and turns in the US economy and politics.

The US dollar solidifies its leadership position in the issuance of emerging market bonds.

Carmen Altenkirch, analyst at Aviva Investors, said: "Issuers will closely monitor the upcoming US elections, and if concerns about US economic growth intensify, spreads may widen significantly. The situation in early August served as a reminder to everyone that the market is unpredictable."

Data compiled by Bloomberg shows that the issuance of US dollar-denominated bonds by emerging market governments and corporations has increased by 54% this year, reaching $349 billion, the largest YoY increase since 2012. Euro-denominated bond issuances increased by 26% to reach €64 billion, while the total issuance of bonds in yen, Swiss francs, and British pounds amounted to $9 billion.

Trang Nguyen, Global Head of Emerging Market Credit Strategy at BNP Paribas, said: "In this environment, you need to leverage your investor base to provide funding and liquidity. That's the benefit that issuing US dollar bonds can bring."