News Overview

EM Corporate Bond Newsletter

November 2025

Monthly report of the fund management

 

Emerging market corporate bonds once again delivered a positive performance in October. Longer-term US government bonds (maturity > 7 years) provided support once again, with yields closing to 10 basis points lower. Spreads remained stable once again, showing slight weakness towards the end of the month.

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

 

Macro Overview

Market favorites and so-called momentum trades (except for AI stocks) suffered a setback in October. Gold, silver and crypto markets lost ground, in some cases significantly, in October because momentum slowed and precious metals in particular had entered a phase of extreme short-term exaggeration. Financing costs for financial intermediaries in the US have recently risen just as sharply which can also lead to higher volatility and, subsequently, to a market correction. 

The Fed once again lowered key interest rates by 25 basis points, although this move left a slightly bitter taste in the market, as yields responded with an increase. Powell himself did not seem to be entirely convinced by the move, as was evident from the tone of his statement. A further cut in December would depend on the latest data (inflation). The US administration was in a forced hiatus until recently, with the two parties unwilling to give ground on their positions to agree on the country's financing. However, the US Senate has now voted to end the shutdown – just in time for Thanksgiving. Neither party can afford to allow the potential chaos and discontent among the population to become too big during this very popular travel season in the US. 

Emerging Markets Overview

Trump and Xi agreed in Busan (South Korea) to de-escalate the trade war. It remains to be seen how long this will last, as according to the CEO of Nvidia, China will win the race for AI...

As Xin Qiji once wrote: "The green mountains cannot bar the river's way, it flows east." Translated to the current situation, this means that the mountains (the US) cannot stop the river (China) which simply flows around them (see Chinese exports through Vietnam...).

Wang Yi (China's Foreign Minister) formulated this way: "The US robs if it cannot compete and destroys if it cannot obtain." Why the Chinese are now so good at building cars is not mentioned... 

The country's new five-year plan picks up where its predecessor left off.

The goals are to strengthen and further expand the high-tech industry, the military and independence in as many areas as possible. 

In my view, this will reinforce China's slowly suffocating industrial dominance and, as a result, structural unemployment, rising debt and, consequently, further, more extreme political tendencies can be expected in the Western world and in those countries with a high export share. 

Uzbekistan received a 500 mn. US-Dollar loan from the Asian Development Bank to push ahead with structural reforms. The country's bonds are among the top performers in 2025 so far but are now "only" fairly priced. Where possible, we gave the EUR 2029 issue a 1% weighting in our funds and mandates.  

The elections in Argentina ended with a slight surprise. Milei won by a clearer margin than expected, triggering a strong rally on the markets. Now seems to be the time for him to open his policies to local governors and build a broader consensus for his policies. However, the initial trends following his victory do not yet show any clear steps in this direction. For now, however, the markets appear reassured that the communists should be "out of action" for at least the next 1.5-2 years – until the next general elections in 2027. 

Overview of EM Companies

Braskem (BRA) is heading for a restructuring. Latin America's largest chemical company plans to announce its plan publicly by January 2026. The market is already pricing in a significant haircut and a possible capital increase, with bonds currently trading at prices between 30% and 40%. 

Other chemical companies such as Alpek and Orbia also reported weak figures which means their ratings will move towards high yield.  

After price losses, Raizen bonds (ethanol, sugar, petrol stations in Brazil and Argentina) are showing initial signs of stabilisation with yields in the range of 8–9%. Shell, one of the major owners, had finally signaled its willingness to invest up to 1 billion US-Dollar, provided that someone else was prepared to come on board. The company has good assets and restructuring is underway – it is currently in the process of selling its refinery and petrol station network in Argentina. A capital increase would pave the way for greater stability within the company. We bought during this period of weakness and reduced our underweight position. 

Minerva presented better cash flow figures and, following the capital increase, the balance sheet is looking better again. For the time being, however, we remain neutral in view of the valuation. 

Celara and CMPCCI, the two paper companies from Chile, had to report an increase in debt. We are underweighted in both companies. China is also expanding its capacity in this area (based on wood chips, among other things). We view this development in the industry with some concern, given that the steel and chemical industries have recently demonstrated what Chinese overcapacity can cause on global markets. 

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

Outlook & Performance

There is a certain amount of unrest evident in the market and in the reactions of various participants. The higher refinancing costs, the sharp correction in overheated asset classes and the warning from one of Wall Street's most respected bankers – JPMorgan Chase CEO Jamie Dimon – about "cockroaches" in the (private) credit sector in the US, combined with low spreads (as compensation for the risk taken), make this nervousness understandable. 

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

Performance opportunities for the funds:

  • Idiosyncratic situations at individual companies offer opportunities for additional returns

  • Absolute yield level remains attractive

Performance risks for the funds:

  • Tight liquidity situation on the US money market

  • Increased warnings of "bubble formation" in AI and private debt
     

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 October 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

Overview Erste AM EM corporate strategies

Source: Erste Asset Management; Data as of 30.9.2025

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

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  web site 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 fund prospectus or the Information for Investors pursuant to Art  21 AIFMG and the Key Information Document are available, and any additional locations where the documents can be obtained can be viewed on the web site 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 web site 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.