News Overview

EM Corporate Bond Newsletter

September 2025

Monthly report of the fund management

Emerging market corporate bonds achieved a slightly positive absolute performance in August, with risk premiums narrowing slightly. US yields fell by approximately 15-30 basis points across the yield curve, with shorter maturities performing better.  

Note: Past performance is not a reliable indicator of future performance.

 

Macro Overview

On the commodity markets, the price of copper rose slightly, with zinc and iron ore following a similar trend. Negative market sentiment put some pressure on the oil price which fell by just under 10%. Short positions on the market are at their highest level in decades – there are fears that major OPEC+ members will increase production. This did not materialise (the final figure was just under 140k barrels), leading to a slight price recovery at the beginning of September. Inventories in China are comparatively low, and possible further sanctions on Russian oil could reduce supply somewhat. For these reasons, the price could stabilise at around 66 US-Dollar per barrel for Brent crude for the time being. 

The sharp revision of new jobs created in recent years (over 2 million fewer) generated new momentum for stronger interest rate cuts in the market and put the US statistics authority back in the spotlight. The prospects for new jobs also clouded up significantly but layoffs remain at a fairly low level. 

However, the deportation of illegal immigrants is likely to have a negative impact on the available labour force. Various forces are currently affecting the US labour market, and it remains unclear what the consequences will be. 

Interestingly, despite numerous negative headlines about the high level of US debt and the threat of a buyer's strike on US government bonds, the US bond market (on a USD basis) has been one of the best performers since the beginning of the year, alongside the German, Japanese and UK bond markets – as we all know, those declared dead often live longer.

Emerging Markets Overview

The latest information painted a mixed picture of the Chinese economy. Exports have recently weakened (due to frontrunning purchases expiring as a result of tariffs), as have imports, and so the trade surplus remained at a very high level. Credit growth also contracted in July for the first time in two decades. The country is planning measures to reduce certain overcapacities, such as in the chemical sector, and is launching a new mega-project, the Tibet-Xinjiang railway, to support the economy.

At the end of August, Tianjin hosted the 25th meeting of the SCO (Shanghai Cooperation Organisation), which had the highest number of participants in its history. Modi, Putin and Kim Jong-un did not miss the opportunity to demonstrate themselves as the antithesis of the US alongside Xi. 

Protests are currently underway in Indonesia (as well as in Serbia, Turkey and Brazil). People in the Asian country are protesting because life has become more difficult since the pandemic. They are burdened by high prices, fewer jobs and lower wages. The price dumping of Chinese goods is also making life difficult for local SMEs. At the same time, salaries and other benefits for politicians and civil servants are rising. The Prime Minister dismissed the finance minister, but these measures are more cosmetic in nature. So far, however, the markets have reacted only slightly negatively. We had already slightly reduced our weighting in the fund before and are positioned in bonds with a remaining maturity of up to 5 years.

Guatemala has presented anti-money laundering laws in parliament to bring its own legislation into line with international standards. We welcome this step and are maintaining our overweight of government and corporate bonds in our EMC portfolios. 

S&P improved Kazakhstan's outlook and raised its rating from neutral to positive. The country is trying to improve tax revenues, and increased oil production (above the OPEC quota) is stabilising growth and the budget. 

In Brazil, supporters of former President Bolsonaro took to the streets. He is now facing trial because, according to the public prosecutor's office, he planned a coup after losing the 2022 elections. The trial is also one of the reasons why Trump imposed tariffs.

The trend towards cheaper refinancing of existing USD loans is gaining momentum in emerging markets – we reported on Colombia in August. Now Kenya also wants to convert its USD loans into cheaper CNY loans. The Chinese yuan is increasingly seen as a funding currency for EM bonds, as it offers lower absolute yields than the US dollar at present. This is particularly interesting for countries and companies that have economic ties with China. 

Overview of EM Companies

Klabin (BR) reported stable figures, but imports of coated cardboard from China put pressure on local sales prices. Similarly problematic in Brazil is the price dumping of Chinese steel. 

Ecopetrol (CO) also delivered stable figures, but the low oil price is also a headwind for this company in the coming period. 

JSW Infrastructure (IN) was upgraded to BBB- by Fitch & S&P, while Moody's gave the company a positive outlook with a Ba1 rating. We have liked the company for a long time and remain overweight. 

Ambipar (BR) bonds came under further pressure after the company was sold off due to potential share price manipulation. It is also struggling with high financing costs, although profitability is acceptable. Nevertheless, we did not and do not have a position in the fund for fundamental reasons.

Note: The companies listed here have been selected as an exmaple and do not constitute an investment recommendation.

Outlook & Performance

The technical strength of the market continues unabated. Political and/or economic risks such as those in Indonesia, Turkey or Argentina (Milei lost an important local election in Buenos Aires) are virtually ignored in corporate bonds. In our view, the market has become too complacent, and we therefore seek to avoid the losers and remain close to the benchmark in such an environment.

Note: Please note that investing in securities involves risks as well as opportunities.

Performance opportunities for the funds:

  • September offers usually numerous new issues and favourable entry prices

  • Absolute return levels remain attractive

     

Performance risks for the funds:

  • The market is too complacent and is hardly reacting to local risks in individual emerging markets (Turkey, Indonesia, Argentina).

  • Weakness in the US labour market, rise in non-performing loans – possible harbinger of a slowdown in the US economy

Overview Performance

ERSTE BOND EM CORPORATE

Note: Performance chart since fund launch. Past performance does not allow any reliable conclusions to be drawn about the future performance of the funds. The performance is calculated according to the OeKB method. The performance assumes a full reinvestment of the distribution and takes into account the management fee and any performance-related remuneration. The one-off front-end load that may be incurred upon purchase and any individual transaction-related or ongoing income-reducing costs (e.g. account and custody account fees) are not included in the presentation.

Institutional share classes

AT0000A1W4B7 = Distributing share (A)
AT0000A1W4C5 = Accumulating share (VT)

Retail share classes

AT0000A05HQ5 = Distributing share (A)
AT0000A05HS1 = Accumulating share (VT)

ERSTE BOND EM CORPORATE IG

Note: Performance chart since fund launch. Past performance does not allow any reliable conclusions to be drawn about the future performance of the funds. The performance is calculated according to the OeKB method. The performance assumes a full reinvestment of the distribution and takes into account the management fee and any performance-related remuneration. The one-off front-end load that may be incurred upon purchase and any individual transaction-related or ongoing income-reducing costs (e.g. account and custody account fees) are not included in the presentation.

Institutional share classes

AT0000A1Y9D0 = Distributing share (A)
AT0000A1Y9H1 = Accumulating share (VT)

Retail share classes

AT0000A0WJX7= Distributing share (A)
AT0000A0WJZ2 = Accumulating share (VT)

ERSTE RESPONSIBLE BOND EM CORPORATE

Note: Performance chart since fund launch. Past performance does not allow any reliable conclusions to be drawn about the future performance of the funds. The performance is calculated according to the OeKB method. The performance assumes a full reinvestment of the distribution and takes into account the management fee and any performance-related remuneration. The one-off front-end load that may be incurred upon purchase and any individual transaction-related or ongoing income-reducing costs (e.g. account and custody account fees) are not included in the presentation.

Institutional share classes

AT0000A1PY56 = Distributing share (A)
AT0000A2MKX2 = Accumulating share (VT)

Retail share classes

AT0000A13EF9 = Distributing share (A)
AT0000A13EH5 = Accumulating share (VT)

Overview performance contribution in %

Performance contribution at country level

(relative to the benchmark)

Performance contribution at share level

(relative to the benchmark)

Source: Erste AM; Calculation period August 2025; Contribution to gross excess returns in %, Fund: ERSTE BOND EM CORPORATE, Benchmark: J.P.Morgan CEMBI Broad Diversified Composite Index hedged in EUR; Gross performance data (without deduction of management fee); The companies listed here have been selected as examples and do not constitute an investment recommendation. In the context of active management, the above portfolio positionings may change at any time. 

Fund management

Lead-Manager Péter Varga

...has been a member of the Credits team at Erste Asset Management since 2005. As a Senior Professional Fund Manager, he is responsible for various emerging market corporate bond strategies in the team. He has more than 20 years of investment experience. Before joining the company, Péter Varga was responsible for convertible bond and corporate bond funds and the management of two total return funds at Union Investment (Frankfurt/M.).

Co-Manager Thomas Oposich

...is a senior fund manager in the fixed income division of Erste Asset Management. His current focus is on emerging market corporate bonds. Thomas Oposich has been with the company since 2005 and has many years of experience in bond management. During his career, he has been responsible for a broad range of bond funds consisting of US government, money market and corporate bonds, as well as mortgage-backed securities and euro government bonds.

Co-Manager Agne Loibl

...has been with Erste Asset Management since 2010. As a Senior Fund Manager in the Credits team, she is responsible for emerging market investment grade corporate bonds and the Asian markets. Agne Loibl has extensive experience in the area of credits. She started her career in research at ESMT Customized Solutions in Berlin and moved to Risk Management Securitisations at Erste Bank in 2007. 

Relevant new issues

No relevant new issues in August.

Overview Erste AM EM corporate strategies

Source: Erste Asset Management; Data as of 31.7.2025

Ratings

For a further analysis, you can view our fund at:

Morning Star Rating:                4 Stars
Morning Star Sust. Globes:     3 Globes
Scope Rating:                           A – 69/100

Contact us

Personal contact with you is particularly important to us.
If you have any questions about our investment solutions, our team will be happy to help you.

E-Mail: institutional@erste-am.com

Risk notes for the mentioned funds

Disclaimer

This document is an advertisement. Please refer to the prospectus of the UCITS or to the Information for Investors pursuant to Art 21 AIFMG of the alternative investment fund and the Key Information Document before making any final investment decisions. All data is sourced from Erste Asset Management GmbH, unless indicated otherwise. Our languages of communication are German and English.

The prospectus for UCITS (including any amendments) is published in accordance with the provisions of the InvFG 2011 in the currently amended version. Information for Investors pursuant to Art 21 AIFMG is prepared for the alternative investment funds (AIF) administered by Erste Asset Management GmbH pursuant to the provisions of the AIFMG in connection with the InvFG 2011.

The fund prospectus, Information for Investors pursuant to Art 21 AIFMG, and the Key Information Document can be viewed in their latest versions at the  website www.erste-am.com within the section mandatory publications  or obtained in their latest versions free of charge from the domicile of the management company and the domicile of the custodian bank. The exact date of the most recent publication of the fund prospectus, the languages in which the Key Information Document is available, and any additional locations where the documents can be obtained can be viewed on the website www.erste-am.com. A summary of investor rights is available in German and English on the website www.erste-am.com/investor-rights as well as at the domicile of the management company.

The management company can decide to revoke the arrangements it has made for the distribution of unit certificates abroad, taking into account the regulatory requirements.

Detailed information on the risks potentially associated with the investment can be found in the fund prospectus or Information for investors pursuant to Art 21 AIFMG of the respective fund. If the fund currency is a currency other than the investor's home currency, changes in the corresponding exchange rate may have a positive or negative impact on the value of his investment and the amount of the costs incurred in the fund - converted into his home currency.

Our analyses and conclusions are general in nature and do not take into account the individual needs of our investors in terms of earnings, taxation, and risk appetite. Past performance is not a reliable indicator of the future performance of a fund. Please note that investments in securities entail risks in addition to the opportunities presented here. The value of shares and their earnings can rise and fall. Changes in exchange rates can also have a positive or negative effect on the value of an investment. For this reason, you may receive less than your originally invested amount when you redeem your shares. Persons who are interested in purchasing shares in investment funds are advised to read the current fund prospectus(es) and the Information for Investors pursuant to § 21 AIFMG, especially the risk notices they contain, before making an investment decision.

Please consult the corresponding information in the fund prospectus and the Information for Investors pursuant to Art 21 AIFMG for restrictions on the sale of fund shares to American or Russian citizens. Misprints and errors excepted.

The public sale of shares in the specified fund in Germany was registered with the Federal Financial Supervisory Authority, Bonn, pursuant to the German Kapitalanlagegesetzbuch (KAGB). The issue and redemption of unit certificates and the execution of payments to unit holders has been transferred to the Fund's custodian bank/depositary, Erste Group Bank AG, Am Belvedere 1, 1100 Vienna, Austria. Redemption requests can be submitted by investors to their custodian bank, which will forward them to the Custodian Bank/Depositary of the Fund for execution via the usual banking channels. All payments to investors are also processed via the usual banking clearing channel with the investor's custodian bank.. In Germany, the issue and return prices of shares are published in electronic form on the website www.erste-am.com (and also at www.fundinfo.com). Any other information for Shareholders is published in the Bundesanzeiger, Cologne.

Presentations:

It is expressly noted that presentations shall not be construed as providing investment advice or investment recommendations; presentations simply represent the current market opinion. The presentations are not intended as sales instruments and shall therefore not be construed as an offer to buy or sell financial or investment instruments. The investor shall be solely responsible for any and all decisions that he makes on the basis of this presentation.