Frontier Daily, 6 January: Venezuela, Lebanon, Senegal, and Ethiopia gain

• Venezuela 2034 eurobonds +28.7% as markets priced higher restructuring odds following the US capture of President Maduro

• Lebanon 2035 eurobonds +9.5% amid cabinet approval of the long-awaited banking law in December

• Senegal 2033 eurobonds +4.2% as Finance Minister Diba said talks with the IMF could be finalised “very soon”

  
  

EM eurobonds spreads widened 2bps yesterday (based on the median across our sample) while the US 10-year yield fell c3bps to 4.17%, as investors weighed weaker US manufacturing data alongside heightened geopolitical risk following the US capture of Venezuelan President Nicolas Maduro.

Europe, Middle East

• Lebanon's 2035 eurobonds gained 9.5% as markets digested news from 26 December that the draft of the long-awaited banking law was approved by the country's Cabinet, moving it on to be seen by Parliament, a stage that could be more challenging with legislative elections due in May 2026. The draft banking law aims to distribute crisis losses and unlock international support. Separately, security risks remain elevated, with Israel carrying out multiple airstrikes across southern and eastern Lebanon yesterday and early today ahead of a key government meeting on Hezbollah’s disarmament.

  
  

• Ukraine’s 2036 eurobonds dropped 1.5% yesterday. Reports last week suggested US-led peace negotiations had been complicated by Putin's reaction to an alleged drone attack on his residence. The Russian leader said he would revise the country's negotiating position following the attack, which has been denied by Kyiv.