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2026-07-16 19:38:11
[Middle East Bond Spreads Surge to Four-Year High, Geopolitical Risk Premium Overshadows Regional Investment Logic] ⑴ JPMorgan data shows that within a week of the renewed escalation of the US-Iran conflict, the average risk premium of Middle Eastern sovereign bonds over US Treasuries widened by approximately 20 basis points to 402 basis points, the highest level in nearly four years. ⑵ The region's bond risk premium recorded its fastest year-to-date increase since 2018, with investors demanding that Middle Eastern governments pay the highest additional financing costs since October 2022. ⑶ Before the outbreak of war, the investment logic in the Middle East mainly revolved around development themes such as Dubai's real estate boom and Riyadh's Vision 2030. Now, investment considerations have shifted significantly towards pricing in geopolitical risks. ⑷ An institutional strategy director pointed out that investors were overly optimistic about the ceasefire agreement reached in April, and the current jump in spreads is a concentrated reflection of the market's repricing of geopolitical risks. ⑸ If the conflict continues to escalate, the cost of sovereign financing in the Middle East will further increase, and regional economic transformation plans and infrastructure investments may face funding squeeze risks.
