Suddenly, it's a year of mega bond deals in emergingmarkets.

Argentina drew US$65 billion in bids for its $16.5 billionoffering in April, and now borrowers in the Middle East arestepping up. Abu Dhabi returned to the international capitalmarkets with a $5 billion placement, followed by a record $9billion sale by Qatar. Saudi Arabia is looking to sell as much as$15 billion of bonds in a debut offering, people with knowledge ofthe matter said.

Governments in the six-nation Gulf Cooperation Council, whichincludes Saudi Arabia and the United Arab Emirates, are turning toforeign markets after the plunge in oil prices punched holes intheir budgets. Issuers are also rushing to capture lowerborrowing costs before a potential Federal Reserve interest-rateincrease. After the slowest first quarter since 2010, themega-deals have propelled dollar- and euro-denominated bond salesfrom developing nations to almost $120 billion in April andMay.

“The current spike in issuance is certainly down to borrowerstrying to beat a likely Fed rate rise this summer,” said MohammedElmi, an emerging-market money manager at Federated Investors inLondon, which bought Argentine and Qatari bonds. “They are alsowary of other factors that could cause market dislocation,” such asthe U.K. referendum on European Union membership, he said. TheBrexit vote is scheduled for June 23.

The average yield on Middle Eastern dollar bonds fell more than60 basis points, or 0.6 percentage point, to 4.8 percent from thisyear's high in January, according to JPMorgan Chase & Co.indexes. That's as the oil price, which has more than halved sincemid-2014, recovered some ground. The issuance is a sign the world'sbiggest oil-exporting region wants to move away from plunderingrainy-day funds to bridge the almost $900 billion of fiscalshortfalls the International Monetary Fund estimates they will facethrough 2021.

Saudi Arabia, which drained 20 percent of its foreign assetssince the end of 2014, is looking to sell bonds after the holymonth of Ramadan, which ends in July, people familiar with itsplans said. Oman will meet with investors in London and the U.S.this week and next for a debut dollar bond sale, a person familiarwith the information said on Wednesday, asking not to beidentified.

“Saudi and the Gulf countries need funding to cover the trail ofred ink left by low crude prices,” said Greg Saichin, whohelps manage $2.4 billion as chief investment officer foremerging-market fixed income at Allianz Global Investors EuropeGmbH.

The GCC is home to almost a third of the world's proven oilreserves, and governments in the region rely on crude sales to fundpublic spending. Saudi Arabia may post a budget deficit of $87billion this year, and Qatar's may reach $13 billion, its firstshortfall since 2011, according to central bank data compiled byBloomberg.

'Difficult' Profiles for Sovereign Debt

Argentina's successful return to global bond markets this yearfollowing its historic 2001 default helped convince other countrieswith “difficult sovereign profiles,” like Oman and Saudi Arabia, tobring big offerings to market, said Sergey Dergachev, who helpsoversee $13 billion of emerging-market debt as a senior moneymanager at Frankfurt-based Union Investment Privatfonds GmbH.

Russia also came back to international capital markets.Last week, the country raised $1.75 billion in a sale of 10-yearnotes, its first since U.S. and European sanctions were imposed in2014 against some of its companies and individuals over involvementin the Ukrainian conflict. More than 70 percent of the sale wasplaced with foreign investors, according to Russia's financeministry.

“The volume of deals these past two months has beenunprecedented for emerging markets,” said Angelo Rossetto, a traderat GMSA Investments Ltd. in London. “It is a race to print beforeFed liftoff.”

Copyright 2018 Bloomberg. All rightsreserved. This material may not be published, broadcast, rewritten,or redistributed.