Emerging market bonds

22 September 2026, 17:03 UTC Chief Investment Office GWM Investment Research For investors outside of the US

Sukuk List: Maintaining a preference for high- quality sukuk Emerging market bonds Authors: Tatiana Boroditskaya, PhD, Analyst, UBS AG London Branch; Emre Tekmen, Analyst, UBS Switzerland AG

• Elevated oil prices and geopolitical trade disruptions are keeping inflation risks in focus. Higher policy rate expectations and government bond yields have weighed on sukuk performance.

• September sukuk issuances were met with robust demand, signaling continued investor confidence. We believe the current level of sukuk yields offers an attractive entry point for underallocated investors. We maintain a quality bias, favoring higher-rated issuers while remaining selective in high yield.

• Key risks include geopolitical developments, the global macroeconomic backdrop, the oil price outlook, and issuer-specific factors. Source: UBS Please note that CIO does not certify compliance with Sharia for the sukuk mentioned in this report, but instead relies on the issuers' indication of an instrument being sukuk and its structure. The labeling of instruments as sukuk in this report should not be construed as implying a CIO view on the veracity of Islamic credentials.

Inflation remains top of mind for investors and policymakers With the index yielding around 6%, we see an attractive as oil prices stay elevated. Traffic through the Strait of entry point for investors who are underallocated to sukuk. Hormuz remains constrained, while an attack damaged The asset class offers competitive carry and potential three pumping stations serving Saudi Arabia’s East-West diversification benefits within a broader emerging market pipeline. Against this backdrop, the Federal Reserve, credit allocation. In our Top Sukuk List, we maintain a quality European Central Bank, and Bank of Japan raised policy bias, favoring higher-rated issuers while remaining selective rates in September, while markets continue to price further in the high-yield segment. For more details, please refer to tightening. These expectations have been a key driver of the Tables 1-4, which cover the sukuk universe, our top picks, recent rise in government bond yields. and issuer characteristics under CIO coverage.

Higher risk-free rates have weighed on fixed income Table 1 - CIO sukuk coverage: key metrics markets, including sukuk. Year to date, the JPMorgan MECI Sukuk Index has delivered a modest 0.3% return, despite broadly stable credit spreads.

International sukuk issuance regained momentum in September as major borrowers returned to the market. New supply was met with robust demand, underscoring investor confidence: Saudi Arabia’s USD 3.25bn dual tranche sukuk Source: UBS, as of 22 September 2026 was more than five times oversubscribed, while the Islamic Development Bank raised USD 1.5bn.

This report has been prepared by UBS AG London 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

Source: UBS as of 22 September 2026. Restrictions for European Economic Area domiciled investors: 1) Complex bond under MiFID, 2) PRIIPS relevant bond, KID missing exp = Expensive; attr = Attractive

Table 3 - CIO sukuk coverage: List of issuers

Source: UBS, as of 22 September 2026