“Street volumes are very light,” one trader said. “The flows that you are seeing, from our perspective anyway, are mainly in the investment-grade space, largely the high-quality MENA names.”

High-grade Middle East names are the most rates sensitive part of the CEEMEA universe with moves in credits like Saudi Arabia are tightly correlated to Treasuries, on which yields have tumbled in recent days. On Monday morning, Saudi’s US$4bn 5% January 2034s were bid at 4.94%, according to LSEG data. Last Monday they were shown at 5.1%.

“Meanwhile, the high-yield stuff, like Egypt or sub-Saharan Africa, has seen a decline of a point or two today,” the trader said.

Israeli sovereign and corporate credit spreads have ballooned as tensions in the Middle East escalate. The moves follow the assassinations of Ismail Haniyeh, the leader of Hamas’ political arm, in Tehran and Hezbollah commander Fuad Shukr in Beirut last week.

At the sovereign level, the benchmark spread on Israel’s US$2bn 4.5% 2033s is now 44bp wider than where there were quoted a week ago. LSEG data showed the bonds marked at 197bp on Monday morning. Over the same period, Israel’s US$3bn 5.75% March 2054s are 37bp wider to 220bp.

Thanks to the rally Treasuries, however, the yields on the sovereign’s US dollar bonds are largely unchanged.

Corporate spreads have been even more heavily impacted, and yields are much higher. Energean Israel Finance’s US$750m 8.5% September 2033s, for example, are now indicated at a benchmark spread of 560bp, 91bp wider than last Monday. In yield terms, the bonds are bid at 9.39% versus 8.86% a week ago.

“We actually quite like the Israeli corporate space at these levels,” one investor said. “But clearly, it’s an area where you have to keep a close eye on the news.”

The widening in regional spreads isn’t restricted to Israeli borrowers. Other Middle East names are following suit. The Saudi US$4bn 5% January 2034s are now at a benchmark spread of 121bp, having widened 29bp over the past week.

Ukraine has received a US$3.9bn grant from the United States via the World Bank, Ukrainian Prime Minister Denys Shmyhal said on Monday, Reuters reports.

"This is the first tranche of direct budget support from the United States in 2024. In total, Ukraine will receive US$7.8bn in direct budgetary assistance from the United States this year, which will allow us to confidently pass this financial period," Shmyhal said on the Telegram messaging app.