News Overview

EM Corporate Bond Newsletter

March 2026

Monthly report of the fund management

In February, EM corporate bonds received strong technical support from sharply falling US yields. US yields on shorter maturities fell by around 20 basis points, and those on longer maturities by 30 basis points. This was a strong support for absolute performance, as risk premiums rose slightly after having reached new lows in January. 

 

Macro Overview

In February, the US economy still signaled moderate strength: the purchasing managers’ indices improved, and, on the surface, the labor market figures showed a stalemate – no major layoffs but new job creation did not rise further either. On closer inspection, however, it becomes clear that new hires continue to come mainly from the healthcare sector – and that does point to a weaker overall picture. Inflation figures were already edging up slightly in February, and a new dynamic must be expected here from early March at the latest. 

This is because the offensive against the regime in Iran, which began on 1 March, has the potential to have a strong and far-reaching impact on global economic growth and inflation, provided the turmoil in the Middle East and the blockade of the Strait of Hormuz continue for some time. 

It is clear that, should hostilities continue, inflation will rise significantly due to higher oil and gas prices, or due to price increases for other services or products in which oil or gas is used. The rather weak labor markets would hardly allow for wage increases (to offset inflation); rather, there is a risk that cost pressures will be offset by redundancies – which would tend to have a negative impact on aggregate demand. Companies’ profit margins would suffer as a result of weak demand and rising input costs. 

However, this development does not resemble the situation during the COVID-19 pandemic, when inflation was driven by both the supply side (rising input prices, logistical problems) and the demand side (very loose fiscal and monetary policy, tight labour market). This will be a difficult and complicated situation for central banks, particularly as inflation is not being fuelled by the demand side. Interest rate hikes would contribute to a further slowdown in economic output and potentially trigger a recession.

The key question therefore remains how long this military action will last. Although the US President appeared optimistic at the outset – stating that “everything is going according to plan” – the hoped-for regime change in Iran following Khamenei’s death may not materialise.  However, the US congressional elections in the autumn, the surge in fuel prices in the US, and the high economic costs of the military operation worldwide are increasing general uncertainty and the pressure on the US to resolve this conflict.  

Emerging Markets Overview

In China, inflation rose slightly in February, whilst foreign trade once again reached a record high. However, even for an export-oriented nation like China, current developments in the Middle East – and, above all, the blockade of the Strait of Hormuz – are having a negative impact. All countries, regardless of the continent, that import oil and/or gas are severely affected.  

Many central banks intervened in the currency market and some governments fixed prices at the petrol pumps. The release of global strategic oil reserves announced by the International Energy Agency might help somewhat in the short term, but consequently, the replenishment of these reserves will prevent a rapid fall in the oil price to the levels seen at the start of the year. 

In Colombia, according to polls, the chances are good that a united opposition will defeat Ivan Capeda of the current left-wing ruling party in the second round of the presidential elections. Risk premiums reacted positively to this news. 

Investment and certain sectors of the economy in Argentina continue to benefit from Washington’s support and from the current high international energy prices. Bonds issued by oil and gas companies have therefore performed well. 

Elections are also taking place in Brazil on 4 October – here, the president and legislature are up for re-election. A close race is now expected between the elder son of former President Bolsonaro and the current president, Lula. Although Flavio Bolsonaro’s exact plans are not yet known, the markets would welcome a conservative or right-wing president. 

Overview of EM Companies

As previously reported in our newsletters, the emerging market companies relevant to our fund have consistently reported stable results for 2025. In sectors such as chemicals and paper, some reports were weaker and led to negative rating changes in some cases – as with Alpeka, Orbia (chemicals) and CMPCCI (paper). We have reduced our underweight position in bonds from chemical companies slightly – we do not hold any bonds in CMPCCI from Chile. In this sector, we are focusing on the market leader Suzano, partly because it has the lowest production costs.    

We remained underweight in CSN – the company continues to attempt to cover bank loans due for repayment shortly through the sale of subsidiaries (including the cement division).

Major shareholder Shell has taken charge of rescuing the Brazilian sugar and ethanol company Raizen following a disagreement with the other major shareholder, COSAN. The aim is to achieve an out-of-court restructuring. The plan is for fresh capital to come from Shell and for part of the debt to be converted into equity. This news had a positive impact on the company’s bonds, triggering a price recovery from 35% to 50% to the dollar. We are neutrally weighted   here but intend to use the price recovery to reduce our position. 

Note: The companies mentioned in this article have been selected as examples.

Outlook & Performance

We were underweight in companies from the Middle East.  We had also reduced our positions in subordinated bank bonds from the Arab region and, generally speaking, held no bonds from construction companies in this region within the fund.  This is because they have particularly suffered sharp price corrections since the start of the conflict.

Given the current and rapidly evolving news situation, as well as the resulting uncertainty among market participants, it is virtually impossible to make a reliable forecast of the economic consequences of the war in the Middle East. One thing, however, seems certain: the longer this conflict persists and escalates, the greater the economic damage will be. We are therefore considering reducing our risk appetite and adopting a more defensive stance in our funds and mandates. 

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

Performance opportunities for the funds:

  • A swift end to the Middle East conflict with Iran and the reopening of the Strait of Hormuz could trigger a relief rally
     

Performance risks for the funds:

  • Current economic developments could lead to stagflation – with negative implications for economic growth, central bank interest rate policy and corporate profits

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 February 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

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Overview Erste AM EM corporate strategies

Source: Erste Asset Management; Data as of 27.2.2026

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.