Uzbekistan Joins the GBI-EM

• Uzbekistan’s soum-denominated sovereign international bonds will be included in J.P. Morgan’s Government Bond Index – Emerging Markets (GBI-EM), effective 30 September, as announced by the Ministry of Economy and Finance.
• It was the largest local currency transaction in CEEMEA in 15 years. The instrument is the UZS 12.194trn 12.25% note due April 2029, priced on 1 April at $1bn equivalent.

Why it matters

• This should be read alongside our recent note on Uzbekistan’s capital market inflection point where we argued that the reform programme and a deepening capital market were laying the groundwork for a structural re-rating. Three-year soum funding has compressed from 16.625% in 2024 to 15.5% in 2025 to 12.25% in 2026. The inclusion in the index represents validation from the broader market.
• It is important to acknowledge that the notes are denominated in soum but settle in US dollars and are not registered for circulation inside Uzbekistan. Therefore Uzbekistan managed to enter the index without opening the domestic market to foreign investors.
• This is a stark contrast to the access channels India and China were required to build. It represents a genuine improvement in the credit because currency risk now sits with the investor rather than the sovereign.

The Cordoba View

• The carry is better underwritten than the region’s reputation implies. A 14% policy rate against 6.4% inflation, a consolidated deficit of 2.1% of GDP in 2025 and public debt at 31.9% of GDP describe a policy mix in which fiscal policy that reinforces the current fiscal stance.
• Paraguay, the template Tashkent has cited, reached twelve years across three deals and lifted the local currency share of its public debt from 8.3% to 22%. Uzbekistan is on its fourth soum placement and still funding at three years. On one hand, a larger deal at the same tenor would indicate funding pressure. On the other hand, a larger and longer one would indicate a curve being built. That would be the point at which the offshore programme starts to justify the reform narrative attached to it.