CEEMEA distressed credit markets remained active in 2025, driven by African sovereign stress, corporate refinancing risk, and rising pre-emptive creditor engagement in the GCC.

Senegal, Ukraine, Ethiopia, Ghana, Mozambique, and Lebanon were at the forefront of sovereign investors’ attention, while Romania managed to contain its accelerating spread widening.

But it was China’s influence on the restructuring of African sovereign credit that is coming under scrutiny.

The new World Bank International Debt Statistics (IDS) for end-2024 offers further granularity on Senegal’s ‘hidden debt’.

The report reveals China’s leading position as creditor to Senegal, holding around 43% of bilateral official claims. There is also a strong presence of multilateral lenders in the sovereign’s debt stack, including the Islamic Development Bank, the African Export-Import Bank, and the West African Development Bank.

One conclusion that can be drawn from the IDS report is that Senegal’s hidden debt problem partly resulted from a poor reconciliation of debt commitments and disbursements at the IMF, World Bank, and Paris Club-levels, rather than purely administrative mismanagement, according to one buysider.

Although it is too early for committee formation efforts to take shape, advisors, including Ankura, have approached certain Senegal bondholders.

Bond prices have continued to slump after Prime Minister Ousmane Sonko rejected an IMF-backed restructuring plan in November, opting instead for domestic tax mobilisation while avoiding hikes on essentials.

Senegal’s USD 1bn 4.75% 2028 bonds, which were indicated at 82 cents around the time of the prime minister’s statement, have since fallen to 71 cents.

Senegal’s substantial contingent of non-Paris Club creditors in its investor base evokes parallels with Zambia’s restructuring, which faced prolonged delays due to negotiations with non-Paris Club members, chiefly China.

While an agreement in principle had been reached on Zambia’s external debt three years after its default in 2020, it was only in October that several China-based lenders arrived at final terms on the restructuring of their outstanding debt, including Export-Import Bank of China, its largest single creditor.

Elsewhere in sub-Saharan Africa, Ethiopia’s restructuring talks relating to the sovereign’s USD 1bn 6.625% 2024 Eurobond have been deadlocked since October, when negotiations with bondholders collapsed over a proposed variable recovery instrument tied to export performance.

The introduction of such an instrument raises questions about how it should be treated under the G20 Common Framework, with Ethiopia potentially serving as a test case.

Meanwhile, Mozambique has lost the support of UK Export Finance for its major LNG project in Cabo Delgado, after TotalEnergies announced that it will forego the portion insured by the Dutch export credit insurance agency.

Sentiment around the LNG project is a major driver of pricing for the sovereign’s USD 900m 5% 2031s, which are currently indicated at 85 cents, according to IHS Markit. The country enlisted Alvarez & Marsal to advise on a debt restructuring, as it considers a potential liability management exercise on its local debt.

However, some African sovereigns are showing green shoots.

Ghana concluded its non-deal roadshow in London, according to a source close to that situation. The country’s gold reserves have been climbing to record levels over the past year, placing the sovereign in good stead to re-obtain market access after restructuring its USD 9.4bn in outstanding bonds just last year. The Ministry of Finance of Ghana did not respond to a request for comment.

In the Middle East, Lebanon’s defaulted sovereign bonds staged a rally in 2025 that surpassed expectations, according to market participants polled.

The country’s bonds had started the year at around 12 cents, surpassing 23 cents at time of writing. An investor trip organised by Jefferies in September helped fuel the rally in the country’s bonds, with prices climbing to 20 cents after the meetings were held.

Lebanon has been in talks with the IMF on a new program, however key legislative reform, such as the Financial Gap Law is still outstanding.

“Price action in Lebanon’s bonds is driven by politics at this stage, though momentum has eased, as political parties are on the campaign trail for the 2026 general elections,” according to a financial adviser familiar with the situation.

The country had been offering a raft of advisory mandates as it prepared to advance reforms, with Rothschild eyeing a role with the Central Bank, and the Association of Banks in Lebanon retaining Ankura as their financial advisor. Lazard was formally confirmed as advisor to the government earlier in the year.

Elsewhere, Romania delivered a rollercoaster year for investors, with debt yields peaking ahead of the presidential elections in May before reversing course.

Despite earlier negative sentiment, including concerns over a downgrade, the sovereign appears to have turned the page, as yields now sit at their lowest levels for the year to date. Romania’s USD 2.1bn 5.75% 2035s are indicated at 6%, according to IHS Markit.

MHP eyes rare Ukrainian Eurobond refinancing

Ukraine’s landscape remains complex, with stalled GDP warrant talks, delayed state-owned enterprise (SOE) restructurings like Ukrenergo and Ukrainian Railways, and MHP exploring refinancing options that could mark the first corporate issuance since the start of Russia’s full-scale invasion.

The sovereign launched an exchange offer for its GDP-linked securities last week, however market concerns linger around the potential implications on Ukraine’s Series A and B bonds’ loss reinstatement protection.

Talks on Ukraine’s GDP-linked warrants collapsed in November, with disagreements around the language of the loss reinstatement and cross aggregation clauses in focus. Furthermore, despite obtaining the green light from the Group of Creditors of Ukraine on debt sustainability grounds, the sovereign’s proposal would still need to uphold the principle of comparability of treatment when it applies its own debt treatment, meaning that the level of net present value (NPV) haircut and protections on offer remains under scrutiny.

Since the launch of the exchange offer, the Ad Hoc Group and the government have been engaged in negotiations, exceeding the initial timeline of 4 December set by the AHG. Only a few days remain until early-bird voting concludes on Friday (12 December), while the exchange period will remain open through to 17 December.

Energy company Ukrenergo is yet to launch a consent solicitation, after it arrived at an agreement in principle with holders in April. The Ukrainian state-owned energy transmission company is still working on the launch of the consent solicitation, however there is no agreed timeline in place, according to a source close to and a source familiar with the situation.

Ukrainian Railways meanwhile appointed Rothschild as financial advisor, but has yet to determine a strategy for resolving its outstanding Eurobond debt. The company has a significant concentration of maturities due in July 2026, after it PIKed its interest due in January 2025, resulting in the outstanding Eurobond maturity repayment due in July 2026 now reaching USD 703m, according to IHS Markit. Further down the curve, the company has a USD 300m 7.875% bond due in 2028.

Ukrainian corporates remain the most vulnerable in the wider region to distressed liability management exercises, as capital controls issued by the National Bank of Ukraine continue to constrain their ability to redeem bonds at maturity, just as significant maturities are looming.

Agribusiness MHP is engaging bondholders in London to address its upcoming USD 550m 6.95% 2026 bond maturity, exploring a refinancing plan that could include a USD 100m prepayment from offshore accounts and a new Eurobond issuance for the remaining balance. The new bond may be secured by EU-based assets, and could feature a longer maturity than its existing 2029 notes to avoid the issue of temporal subordination.

Should MHP execute a primary market deal, it would be the first corporate credit to do so out of Ukraine since the start of the Russia’s full-scale invasion in 2022. Alternatively, a sell-side analyst and a second buysider suggested that the company could also potentially explore a private credit placement.

Ukrainian pipe manufacturer Interpipe also has debt coming due next year, with USD 223m of 8.375% notes maturing in May. The company has progressively bought back its Eurobonds. However, it remains unclear whether capital controls will limit the corporate’s ability to redeem its 2026 notes, despite USD 263m in cash present on its balance sheet as at 2Q25.

Ukrenergo, MHP and Interpipe did not respond to requests for comment.

Avia rebounds, GTC and Olympic test refinancing markets

Elsewhere in CEE, Avia Solutions Group’s USD 300m 9.75% 2029-maturing bonds dipped to the mid-70s before rebounding to mid-80s amid concerns over the sale of SmartLynx, a subsidiary which shortly after ceased operations.

The company disputed public reports, however investors remain cautious on its ability turnaround its business structure amid reputational challenges. The 9.75% 2029s are currently indicated at 87/88 cents, according to IHS Markit.

Meanwhile, Polish real estate developer Globe Trade Centre in September tapped Perella Weinberg, whilst creditors mandated DC Advisory, in relation to the company’s EUR 500m 2.25% 2026 notes. The company used part of the issuance proceeds from a new senior secured bond anchored by Schroders to tender its outstanding notes, with about EUR 300m of the 2.25% 2026s remaining outstanding.

The transaction was not categorised as a distressed debt exchange by Fitch, despite the rating agency’s earlier assessment that GTC faced high refinancing risk on its bonds and market participants noting that a primary market deal is off the table.

In the meantime, Estonia-based pan-European gaming group Olympic Entertainment (OE), which appointed Rothschild as financial advisor in January, is running against the clock as it explores options for a refinancing despite its EUR 200m 8% bond becoming due on 31 December 2025.

The company noted in its published 3Q25 results that should it not secure financing, it will look at pursuing “alternative financing agreements” with existing bondholders. Albacore, the investor who led the Ad hoc Group in the previous debt restructuring, declined to comment on the matter. OE did not respond to a request for comment.

Turkish corporates brave selloff

Turkish corporates have retained their market access, with around USD 4.1bn-equivalent in bonds issued in 2025 year-to-date, according to Dealogic, and have avoided Eurobond restructurings even as some issuers face operational pressures.

The selloff was initially triggered by the probe into Can Holding in September inflicted damage on corporate credit pricing in Turkey, with names including Vestel and WE Soda still yet to recover to September levels.

Despite the deterioration in pricing, company fundamentals remain broadly in check, however. WE Soda’s USD 800m 9.5% 2028 notes are indicated at 101, still below the 102–103 range seen earlier in 2025, according to IHS Markit.

“WE Soda, for instance, is mainly exposed to political risk, but its operations are sound with strong free cash flow-generation capacity,” said a third buysider.

WE Soda was affected by a wave of negative sentiment affecting Turkish corporates after an investigation into Ciner Group fuelled further selloffs in Turkish corporate credit. The company organised an investor day last week, where it outlined plans to refinance existing debt originated from the acquisition of Alkali and include its US assets within the bond perimeter.

In contrast, Vestel, which is currently the highest-yielding credit in the Turkish corporate credit complex, is grappling with a shifting European market as Chinese imports gain market share.

The home appliance manufacturer’s USD 450m 9.75% 2029s are indicated at 23%, according to IHS Markit. High inventories and substantial supplier debt were also flagged in a recent Debtwire report. Vestel’s bonds had been hovering at between a 9%-11% yield to maturity for most of this year, according to IHS Markit.

“Vestel’s main advantage is that its bonds are due far in the future, however the company needs to address its operational underperformance in the meantime,” said the second buysider in relation to its operational losses, which stood at TRY 4.57bn (USD 107m) as at 9M25.

Meanwhile, the largest debt restructuring in the Turkish market, Yapi Merkezi, was still pending the satisfaction of conditions subsequent in October, according to a source close to that situation. The conglomerate’s debt stack tops USD 3bn-equivalent, spread across more than 30 lenders.

Yapi Merkezi did not respond to a request for comment.

UAE and Saudi still dominant in GCC restructuring

The United Arab Emirates and Saudi Arabia remained the dominant markets for restructuring in the Gulf Cooperation Council region in 2025, with high-value cases emerging in both countries.

The bulk of the USD 87bn-equivalent outstanding debt in the region is being restructured out of court, Debtwire’s Restructuring Database shows.

High-profile cases were initiated, such as the USD 2bn IFFCO restructuring in the UAE, as first reported by Debtwire in September, and Rawabi in Saudi Arabia.

IFFCO initially worked with Alvarez & Marsal (A&M) before switching to Rothschild in October. A&M had been called in to assess liquidity but the process became a restructuring after a meeting with banks.

Regarding Rawabi, advisors were focusing on the company’s offshore support vessels (OSV) business, on working capital issues.

In the region, company boards of directors are acting earlier to engage in processes, with lenders becoming more proactive, according to those polled by Debtwire.

“Most major banks now operate formal early-warning systems, portfolio-watch committees, and credit-risk units that monitor soft signals – such as covenant drift and margin compression – well before a default,” said Mihir Bhatt, Kroll’s head of restructuring, Middle East. “This shift has accelerated liability management exercises, including maturity extensions and covenant resets, reducing the need for crisis-driven solutions.”

The change has resulted in faster negotiations in some cases, improved recoveries and a growing culture of proactive financial discipline, Bhatt noted.

“Rather than waiting for a crisis, companies and stakeholders are initiating dialogue sooner, which preserves more restructuring options and often leads to more favourable and commercially advantageous outcomes for creditors,” agreed James Long, senior managing director, corporate finance and restructuring, Middle East, at FTI.

In Saudi Arabia, a proactive approach to refinancing was seen by mall operator Cenomi Centers, which launched a tender offer for its USD 875m 5.625% October 2026 sukuk in November, whilst also pricing two sukuk in November: a USD 500m 8.875% 5NC2 note and a SAR 2.05bn (USD 546m) 8.5% 2031 note. The company was first reported to be considering its options in July.

In August, Al Ittefaq Steel was reported to be in discussions ahead of potential restructuring talks, having previously restructured USD 2bn of debt in 2016.

Earlier in the year, Emaar the Economic City announced that it had rescheduled SAR 3.39bn (at the time USD 903m) of bank facilities and secured new financing of SAR 287.3m.

Qatar drafting bankruptcy law changes

Elsewhere in the GCC, Qatar is drafting changes to its bankruptcy law. Bhatt expects similar effects to those of the UAE’s updated law, which came into effect in May 2024.

The changes in Qatar are likely to bring about earlier interventions, clearer outcomes, and rising investor confidence, said Bhatt. “However it will take some time for this to be integrated effectively,” he added.

In the UAE and Saudi Arabia, there is growing comfort in formal and informal insolvency regimes, said Long, as understanding of bankruptcy increases, and interest in acquiring distressed debt positions in the GCC is increasing from international markets.

“Global funds and financial institutions are exploring opportunities to provide debt facilities or to acquire distressed debt positions, drawn in by the improving legal architecture and view on returns,” he said.

The UAE saw an uptick in restructuring cases during the year, particularly in Dubai, with a significant number of new cases in the emirate, Bhatt said.

However, market participants observed differing applications of a 5% deposit rule for bankruptcy-related filings in Dubai and Abu Dhabi courts, speculating that it could be one reason why the volume of cases filed in Dubai outstrips the volume in the capital, Debtwire previously reported.

Across Saudi Arabia, there were 27 new financial restructuring procedures (FRP) initiated in the first half of 2025, compared with 14 in the same period in 2024, according to Kroll data, with more than a third involving real estate, construction, and contracting, with other sectors including healthcare and industrials.

Most activity during the year, however, involved legacy cases requiring further action, such as Petrofac, or, cases that were resolved out-of-court, according to Bhatt.

Restructurings in the GCC can often be protracted, he added, such as that of UAE’s Al Jaber, which remains unresolved. The conglomerate, which has undergone multiple rounds of restructuring since it was first reported to be requesting a delay on USD 1.6bn of debt repayments in 2010. The company paid AED 800m (USD 217m at the time) of its debts in November 2023.

The latest attempt at restructuring could see the company go through an onshore court process in Abu Dhabi.

Another long running situation, Amlak Finance, saw resolution in July when the company announced it had settled AED 10.2bn (USD 2.78bn at the time) of debt to 29 financiers a year ahead of schedule. It first formally entered restructuring in 2014 for debts originating from 2008.