News Overview

EM Corporate Bond Newsletter

February 2026

Monthly report of the fund management

The markets experienced a turbulent start to the new year. Spreads ended January around 10 basis points tighter. However, the riskier rating segments, from BBB down to the high-yield range, benefited most from the seemingly endless search for yield.

Longer-dated US government bonds were volatile – partly influenced by the high volatility of the Japanese bond market – but closed virtually unchanged. Yields on shorter maturities, on the other hand, rose slightly. The absolute performance of the asset class in January was around 0.6%. 

Note: Past performance is not a reliable indicator of future performance. Investions in securities entail risks in addition to the opportunities described.

 

Macro Overview

With markets generally driven by high-leverage momentum trades recently, commodity markets were no exception. Various narratives served this purpose, such as "asset protection against rising government debt". As a result, gold and silver rose to unprecedented heights, but other metals also saw strong gains in the first weeks of the year.

This pleased many traders until the stock exchanges significantly raised the capital rules for derivatives in these areas, triggering an equally unprecedented crash. The oil price benefited from tensions surrounding Iran and closed more than 10% higher. My conclusion: higher commodity prices could drive up inflation in the coming months.

The US purchasing managers' indices reported a slight improvement in economic sentiment, and the labour market also remained stable for the time being. However, companies such as UPS, Amazon and Dow Chemical reported a total of around 50,000 job cuts, triggered by bureaucracy reduction (AI at Amazon) or difficult economic conditions/competition at Dow and UPS. 

Note: The companies listed here have been selected as examples and do not constitute investment recommendations.

The Fed left key interest rates unchanged and once again emphasized data-based decision-making. According to chairman Powell, if inflation figures fall in the second half of the year, the Fed would then reduce key interest rates. There were also stronger market reactions when Kevin Warsh was nominated to succeed Powell, as there were fears that Warsh would be inclined to overturn the historic agreement concluded between the Fed and the Treasury Department in 1951. This agreement essentially reaffirmed the Fed's independence, refrained from controlling the yield curve, and acknowledged the sensitive issue of the conflict between debt management and currency stability. Another key point of the agreement was the fight against inflation. A departure from this agreement would lead to a significant devaluation of the US dollar and to a sharp rise in inflation.

Emerging Markets Overview

According to a Bloomberg report on January29, numerous Chinese companies had already stopped reporting on fundamental indicators (known as the "three red lines") required by the authorities back in 2023. The news caused the stock and bond prices of companies still active to rise... However, in our view, this should be seen as rather negative, as it simply highlights the never-ending problems in this sector.  

Reports from BYD about a sharp decline in sales of electric vehicles in China – after government subsidies ended – and news of falling Chinese beef consumption confirm China's predicament in recent months.  China is forced to continue relying on its export machine, as domestic consumption is failing to take off due to wage deflation and a weak labour market. The country intends to plug the growing budget gap with, among other things, AI-based data analysis of its citizens' assets potentially hidden abroad and is requiring an ever-increasing proportion of the population to declare their offshore assets and profits. 

There are also increasing numbers of analyses calling for a necessary revaluation of the Chinese currency, with the aim of creating more fairness in global trade. The 1985 Plaza Accord, when the US and its European allies allowed the Japanese yen to appreciate significantly in the following years, is cited as an example of this. A revaluation could also increase the international standing of the renminbi. It is also noteworthy that China's local FX liquidity continues to rise (see chart), thereby supporting the already narrow risk premiums of Asian corporate bonds. China's rapid expansion and modernization of its military is also being closely monitored in Washington. 

Meanwhile, the US is establishing cooperation with Venezuela's new leadership and inviting other nations such as China to invest in the country's oil sector – but only under US supervision, of course.

In Guatemala and other countries such as Costa Rica and Peru, the security situation has recently deteriorated. The reason for this is that the US is stepping up control of the waterways used for drug trafficking, prompting the cartels to switch to overland routes. So far, this news has not had any impact on risk premiums, so we are maintaining our overweight position in Guatemalan government and corporate bonds for the time being. 

An interesting report has been published by CAF, the Development Bank of Latin America. It recommended that Bolivia, Argentina and Chile form a kind of “lithium OPEC” (basically a cartel) based on their lithium reserves to strengthen their role in the energy transition. 

There are increasing signs of stability in Argentina as relations with the US continue to improve. Most recently, for example, the conditions for importing beef from Argentina were further relaxed. The country does not intend to issue any new US dollar bonds this year and will cover refinancing from other sources. Depending on the mandate and fund, we remain neutral or overweight, even though spreads are now quite low. 

Overview of EM Companies

The reporting season is in full swing. We remain overweight in JSW Infrastructure, one of India's largest port operators. The company reported good figures and has a stable debt structure. Moody's is still maintaining its Ba1 positive rating, and we expect a spread narrowing of around 25 basis points if it is upgraded to Baa3, so we remain overweight. 

CMPC's (Chile; paper industry) figures were rather weak, investments are pushing up debt, and we remain underweight. 

In Brazil, measures against price dumping of steel from Asia are becoming increasingly concrete. This is very positive news for Usiminas and, to a lesser extent, for CSN. We are currently overweight in Usiminas, as we can earn a yield of around 6.5% here. In CSN, on the other hand, we are underweight, as the company simply has too much debt and is currently desperately seeking refinancing. CSN bonds were recently among the worst performers in Latin America, and we were strongly underweight.

Raizen bonds (Brazil; sugar and ethanol producer) have fallen significantly in recent days as the main owners, Cosan (itself involved in a balance sheet restructuring process) and Shell (which does not want to become a majority shareholder), are looking for a co-owner to stabilise the balance sheet. Most recently, a local blogger in Brazil posted that the company was looking for advisors, even though investors had been confident just a few days earlier after a conference call with the company. The bonds are now trading at 50% to the dollar. We were in a more defensive position at the time of the sharp downward movement. 

The perpetual bonds issued by heavily indebted Hong Kong-based company New World Development rose significantly in January. News gradually filtered through that Blackstone might be prepared to invest in the company, although the conditions and structure of any such investment remained unclear. Some market participants may have had a certain information advantage here... We were not invested, which cost us some performance. 

Outlook & Performance

2026 got off to a very strong start, but towards the end of January, a certain disillusionment set in on the equity and commodity markets. Despite this turbulent environment in markets and for companies, we were able to generate a solid positive performance in the funds. 

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

Chart 1: FX (USD) liquidity is very high in China and supports the very narrow risk premiums 
Source: PBOC, Data as of 31.12.2025

Performance opportunities for the funds:

  • Performance opportunities due to liquidity and company-specific developments 

  • New, interesting bond issues  

Performance risks for the funds:

  • Sector-specific and isolated company-specific problem cases 

  • The sometimes strong/excessive risk appetite led to equally strong corrections in the markets – this could continue

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 January 2026; 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 30.12.2025

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.