The increase in government bond yields in the US, Japan, and other developed countries is leading to a rise in global capital costs. As of September 2026, the yield on 10-year US Treasury bonds stands at approximately 4.8%, while the yield on 10-year Japanese government bonds exceeded 3% for the first time in three decades in September.
The reasons for this phenomenon are similar: there are inflation risks, high oil prices, significant levels of government borrowing, and expectations of tighter central bank policies. In Japan, an additional factor is the normalization of monetary policy by the Bank of Japan.
Implications for Global Debt Markets
For global debt markets, this means a need to re-evaluate risks. Since virtually risk-free securities from the US or Japan offer higher yields, investors will begin to demand a higher premium for emerging market bonds. Consequently, new borrowers are forced to offer higher interest rates, and the value of existing bonds may decrease.
Simultaneously, some capital may start flowing out of emerging markets back into developed ones. Japan plays a particular role here: rising domestic rates make foreign assets less attractive to Japanese banks, insurance companies, and other major investors. The rating agency Fitch has already pointed to the probability that more Japanese capital will remain in the domestic market.
Risks for Central Asian Countries
The main risk for Central Asian countries is the increased cost of external financing. The longer high interest rates remain in the US and globally, the more difficult it will be to issue new Eurobonds and refinance market debt. Borrowers who require substantial new loans, have significant foreign currency debt, and weak credit ratings will be the most vulnerable.
Furthermore, high global rates can put pressure on regional currencies due to portfolio capital outflows and increased demand for the US dollar. However, the situation in Uzbekistan appears relatively stable and not alarming. A large share of the country's external public debt is held by official creditors and has long repayment terms, which supports a low level of refinancing risk.
The International Monetary Fund (IMF) assesses the risk of a debt crisis in the country as low. The average premium on Uzbek dollar Eurobonds in 2026 was around 159 basis points. A positive point is also the inclusion of Uzbekistan's sovereign bonds in the J.P. Morgan GBI-EM index starting September 30th, which expands the potential base of foreign investors and may partially offset the deterioration of the global situation.
Thus, the author believes that this is not the beginning of a crisis in the Central Asian bond market, but rather a transition of the region to a period of more expensive capital and increased investor selectivity. Markets will remain accessible to countries with sound budgets, moderate debt levels, and attractive real yields, although the cost of financing may rise.