News Overview

EM Corporate Bond Newsletter

December 2025

Monthly report of the fund management

Traditionally, the calendar year ends with a period of reflection. And when I think about all the events of the year that is coming to an end, I am reminded of a quote from former US President F.D. Roosevelt from April 1938: "Democracy has disappeared in several other great nations. Not because the people of those nations disliked democracy, but because they had grown tired of unemployment and insecurity, of seeing their children hungry while they sat helpless in the face of government confusion and government weakness through lack of leadership in government. Finally, in desperation, they chose to sacrifice liberty in the hope of getting something to eat."

Although the problems today may be somewhat different from those following the Great Depression, I believe there are clear similarities to the current situation. 

But now to the market: emerging market corporate bonds ended November with a performance just in green territory. US yields provided a slight tailwind, with risk premiums rising moderately

Note: Past performance is not a reliable indicator of future performance. The companies mentioned in this article have been selected as examples and do not constitute investment recommendations.

 

Macro Overview

Market favorites and so-called momentum trades were once again in demand. Gold and silver trended upwards again, while the oil price continued to weaken. 

Due to the shutdown, only a few official macro indicators were released in the US. However, some indicators from non-public providers (ADP labor market figures) were on the weaker side. The market priced in a US interest rate cut of 25 basis points in December with a high degree of probability. However, the weaker performance of bonds with longer maturities recently indicated that market participants are exercising a degree of caution with regard to the future development of interest rates and the person and course of the future new Fed chair.

The cut came as expected by the market, but Powell noted the particular challenge of the current situation: ‘A very large number of participants agree that the risks to unemployment and inflation are skewed to the upside. So, what do you do?’ Powell said. ‘You have only one tool, you can't do two things at once. It's a very difficult situation.’

Emerging Markets Overview

In China, the property market remains turbulent. Vanke, the largest private developer supported by state-affiliated companies, warned investors that debts due for repayment shortly would have to be rolled over as there were no funds available for repayment. 

It appears that Vanke's major shareholder, Shenzhen Metro (with a stake of just under 30%), no longer wishes to provide support. The company has already pledged a large portion of its available real estate for refinancing. 

This fits in with the current ambivalent picture of a Chinese property market in crisis, as other property indicators, such as property prices and transactions, especially for second homes, continued to fall. However, there are signs of a slight recovery in transaction volumes and sales prices in so-called Tier 1 cities, where prices rose again in 2025.  

As mentioned in previous newsletters, a large part of the population has invested their savings in real estate or unfinished real estate projects, which have been negatively influencing consumer behavior for years due to market developments. 

In Mexico, foreign direct investment (FDI) has picked up again in recent months despite Trump's rhetoric. This development was boosted by a high reinvestment rate in the country, see chart (the trust in the country is still there).

Chart 1: Reinvestments by foreign investors account for the majority of Mexican FDIs (foreign direct investments). Source: Mexican Ministry of Economy; Data as of 12.12.2025.

Brazil is moving ever closer to a trade agreement with the US, which would further boost the popularity of President Lula. The country is once again seen as a favorite for investments in local currency. Many market participants now expect several interest rate cuts in 2026, as inflation (4.5%) is already back within the range set by the central bank as its target and the economy is performing below average. 

Steel companies such as CSN and USIMINAS expect import rules to be tightened to prevent the domestic market from being further burdened by imports from China and, more recently, South Korea (originating in China?). We currently like USIMINAS bonds (BB rating, 6.6% yield), even though they have recently delivered weaker figures. However, the strong ownership structure and low debt levels are convincing. 

In Ukraine, there are initial signs of a ceasefire. However, time is on Putin's side, as the West is divided over the extent of concessions.  

Qatar plans to invest nearly USD 30 billion in real estate projects in Egypt, further increasing the share of Petro-states in Egyptian real estate development. 

In Senegal, however, a debt restructuring appears to be on the horizon, with bond prices again falling at the end of November.  

Overview of EM Companies

The airlines in Latin America (LatAm Airlines, Grupo Aeromexico, Avianca) all delivered good figures. The outlook for the next six to nine months is also very good, as oil prices are low and demand is rising. The bonds are trading at yields between 6% and 10%, so we have built an overweight position in these securities. 

TIGO, the telecommunications company with branches in Colombia, Paraguay, Guatemala and Uruguay, delivered stable figures. We like its subsidiary COMCEL in Guatemala and have therefore an OW position in the fund. 

Now that Argentina has regained access to the international capital market, Argentine oil companies and provinces are taking advantage of this window of opportunity and are currently issuing more USD bonds.  If we like the business model and the structure of the bonds, we will consider participating in one or more of the subscriptions. 

Outlook & Performance

Sentiment on the equity markets is currently the driver, and as a result, the market for EM corporate bonds is currently hardly moving on its own. Most market participants remain positive for 2026, expecting stable risk premiums and a constructive carry environment.  

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

Performance opportunities for the funds:

  • Low oil prices and stable demand boost airlines in Latin America

  • High industrial metal prices support corporate bonds in this sector

     

Performance risks for the funds:

  • Potential interest rate hike in Japan shortly before Christmas could lead to increased volatility due to low market liquidity

  • China's property market remains in crisis, continuing to weigh on consumer sentiment

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 November 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 31.10.2025

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.