We provide the insights and strategic counsel to help our clients navigate this evolving landscape, unlocking value and building resilience in sovereign and infrastructure finance.

The landscape for sovereign and infrastructure finance in 2026 is defined by a powerful paradox. On one hand, government bond markets are navigating a period of heightened volatility and structural uncertainty. On the other, the insatiable demand for new infrastructure from energy transition and digital networks to transport and social assets has never been more urgent. For finance professionals, the story of 2026 is how these two trends collide and converge, creating a new playbook for nations and the investors who back them.

Liability Management in a Volatile World

After years of aggressive monetary tightening, the global interest rate environment is showing signs of easing, prompting a wave of opportunistic financing. This is particularly evident in emerging markets, where a "great reopening" of international capital markets is underway. Countries like Kenya have successfully returned with multi-billion dollar Eurobond issuances, not to fund new spending, but as a calculated exercise in proactive liability management buying back nearer-term debt to smooth out repayment schedules and ease liquidity pressures. This trend signals a more sophisticated approach to sovereign debt. Nations like the Ivory Coast have set a regional benchmark, raising long-dated 15-year money at remarkably low yields, reflecting deep investor confidence in specific macro stories. However, this access remains deeply uneven . Heavyweights like Egypt continue to navigate severe imbalances, while others like the Democratic Republic of Congo are preparing for debut issuances to fund vital energy projects. Yet, this window of opportunity exists against a backdrop of caution from major institutional investors. As BlackRock highlighted in its 2026 outlook, the traditional "certainty" of government bonds is being challenged by persistent fiscal deficits and large-scale government spending . This has led to a strategic preference among some of the world's largest asset managers to overweight corporate credit, viewing sovereign debt as increasingly "volatile and less certain". The core message is clear: the era of treating all sovereigns as a homogeneous, risk-free asset class is over.

The Great Infrastructure Gap: A $15 Trillion Challenge

The need for massive infrastructure investment is the primary driver of that sovereign spending and the resulting fiscal strain. A recent report by the FII Institute underscores the scale of the challenge: a $15 trillion global infrastructure financing shortfall by 2040 . This gap is a call to action, spanning energy transition, digital connectivity, and transport, with significant regional needs like the $3.7 trillion required in the US and an annual $130–170 billion gap across Africa. Addressing this shortfall requires moving beyond traditional public procurement. The report highlights a pivot toward public-private partnerships (PPPs) as a central financing model, moving from a transactional procurement route to a core strategy. Emerging markets are driving this shift, with countries like the Philippines, Saudi Arabia, and Peru building robust project pipelines. Kenya’s proposed National Infrastructure Fund exemplifies this new approach. Aiming to mobilize up to $34 billion, the fund is designed as a hybrid vehicle, combining public anchor capital with private and institutional investment from pension funds, insurers, and development finance institutions. The goal is to finance roads, energy, and digital infrastructure without relying solely on traditional borrowing, thereby easing pressure on public debt. This model is being replicated globally, with multilateral support playing a key role, as seen in the Asian Infrastructure Investment Bank's (AIIB) commitment to the ISQ Growth Markets Infrastructure Fund II, a $3 billion fund targeting sustainable infrastructure across Asia and Latin America.