Emerging market bonds

18 August 2026, 10:08 UTC Chief Investment Office GWM Investment Research For investors outside of the US

Saudi Arabian credit: Long-term vision and agility Emerging market bonds Authors: Tatiana Boroditskaya, PhD, Analyst, UBS AG London Branch; Santosh Bukitgar, CFA, CAIA, Analyst, UBS AG Singapore Branch; Emre Tekmen, Analyst, UBS Switzerland AG

• Saudi Arabia’s long-term vision to diversify its energy supply routes and localize critical supply chains has enabled the country to remain a reliable global supplier of hydrocarbons despite ongoing trade route disruptions.

• Aramco posted solid results, as higher prices more than offset lower production volumes. In contrast, SABIC reported weak numbers, as higher prices did not fully offset lower sales volumes and higher logistics costs pressured profitability.

• Amid a more challenging operating environment, domestic issuers across banking, telecom, utilities, and real estate reported resilient 1H26 results. Banks reported solid profitability and stable asset quality, but loan- Source: UBS growth guidance may be lowered. Real estate developer Dar Al Arkan reported strong profitability growth and Please note that CIO does not certify compliance with Sharia ample liquidity despite a rising debt load. for the sukuk mentioned in this report, but instead relies • Our credit preference is for investment grade issuers on the issuers indication of an instrument being sukuk and with strong balance sheets. We prefer subordinated its structure. The labeling of instruments as sukuk in this instruments in the banking space. We remain cautious report should not be construed as implying a CIO view on on high yield issuers. the veracity of Islamic credentials.

• The outlook for the energy market, geopolitical developments, and idiosyncratic factors relevant to Related reports individual issuers are key factors to monitor. 5 Aug: Saudi Arabian bank credits: Strong 2Q26 results

Investment view operating profiles. For further details, please refer to our We maintain a preference for investing in emerging bond selections featured in our monthly reports, "Emerging market credit in a diversified manner, with diversification Market Bond Top List and themes" and "Sukuk List," as well across regions, countries, industries, issuers, and credit as our weekly "Emerging Markets Bond List." For further instruments. Within the Saudi credit space, we maintain a details on banking sector developments and 1H26 financial preference for bonds and sukuk of investment grade (IG) results, please refer to our report "Saudi Arabian bank issuers with solid balance sheets. In the banking space, we credits: Strong 2Q26 results," published on 5 August. prefer subordinated instruments, given their decent yield pickup over senior instruments of Saudi banks and similarly Kingdom of Saudi Arabia rated issuers in the region, which could appeal to income- UBS credit view: Stable oriented investors. We believe the strong to stable capital Agency ratings: Aa3, stable / A+, stable positions of Saudi banks cushion the incremental credit risk Analyst: Emre Tekmen taken by investors. For investors looking for exposure in the corporate space, we see select opportunities in instruments Saudi Arabia’s credit profile is supported by its large external of Saudi Aramco and Saudi Telecom, given their resilient buffers, providing resilience amid elevated geopolitical risks.

This report has been prepared by UBS AG London Branch, UBS AG Singapore Branch, UBS Switzerland AG. Analyst certification and required disclosures begin on page 9. UBSFS accepts responsibility for the contents of this report. U.S. persons who receive this report and wish to effect any transactions in any security discussed in this report should do so with UBSFS and not UBS AG. Page 1 of 14

Emerging market bonds: For investors outside of the US

As trade route disruptions in the Strait of Hormuz continue, Saudi Arabia (KSA). This is a natural progression from the Saudi Arabia has rerouted a significant share of its oil fund’s 2021-25 strategy, which focused significantly on exports via the East-West pipeline and Red Sea ports. growth. The fund structures its assets into three…