New issue premiums get crushed in CEEMEA bond, sukuk issuance stampede

Investors were so keen for new bonds and sukuk from CEEMEA issuers in 2025 that they demanded little new issue premium, even though a deluge of issuance meant it has been a record year for volumes by quite some margin.

The average new issue premium paid on syndicated benchmarks by CEEMEA borrowers in 2025 was just 3.6bp as of mid-November and there was a clear split between trades coming before and after the summer.

For those printing before August, the average new issue premium was 3.8bp, but for those coming from late August onwards concessions averaged 1.7bp.

Issuers of all kinds, whether investment grade or those lower down the rating spectrum, have priced deals with zero new issue premium.

For 53% of the 225 new benchmark bonds and sukuk for which there GlobalCapital recorded a concession figure, that number was zero, and only 13% of new issue premiums were in double digits.

An investor base flush with cash and keen to lock in historically high yields and coupons drove the tight pricing, as the US Federal Reserve restarted interest rate cuts in September; a process which is expected to continue into 2026.

Adding in the fact that for much of the year spreads have been at historically tight levels, the CEEMEA bond market has found itself in a Goldilocks situation. This has driven the primary market to a comfortable annual record in terms of volume.

As of November 11, there had been $286.2bn-equivalent of dollar or euro public, benchmark sized bonds in the region, well ahead of the $246.4bn-equivalent at the same point in 2024.

This demand led to healthy book coverage ratios throughout the year. The weekly average was consistent throughout 2025 and never dipped below two times the deal size — and there were some weeks where it was above four times.

Demand was particularly heavy after August — shown by issuers being able to get their deals done without paying much, if any, new issue premium. The average book coverage ratio from late August onwards was 3.6 times, higher than the 3.3 times in July and earlier.

The average amount that CEEMEA issuers were able to tighten from initial price talk was consistent throughout the year. On a weekly average basis it rarely fell below 30bp and for most of 2025 it was in the high-30s or even above 40bp.

Tightening was a little more pronounced after the summer, with issuers from August onwards bringing down spreads or yields by an average of 38.6bp, versus 37.3bp in the first seven months of the year.

One notable change in this year’s primary market was sukuk, which has made up a much greater share of issuance in 2025 versus 2024. Sukuk accounted for 23% of CEEMEA issuance in 2025 to mid-November, versus 16% in the same period last year.

This helped drive down new issue premiums. Sukuk investors are cash heavy and face a dearth of supply, meaning issuers are able to squeeze pricing tighter than on conventional bonds.

Another theme of 2025’s primary market, more prevalent than the year before, was the proportion of subordinated debt. Of the $58.9bn-equivalent of bank bonds this year, 38% has been either tier two or additional tier one paper, versus just 21% the year before.

Much of it (32%) has come from Saudi Arabia, where banks are stocking up on capital for lending to drive the country’s Vision 2030 plans.

Another significant chunk, 13%, has come from Turkey, while in 2025 there were also the first additional tier one notes from Uzbekistan and Kazakhstan.