News Overview

EM Corporate Bond Newsletter

May 2026

Monthly report of the fund management

April was a very good month for emerging market corporate bonds, with risk premiums narrowing by around 30 basis points to 163 basis points – a level last seen in 2006/2007, albeit in a market environment that was significantly different at the time in terms of size and composition.

The sharp narrowing of spreads this month occurred, somewhat counterintuitively, against a backdrop of economic and geopolitical uncertainty (the Iran conflict and its consequences), fuelled by inflows and a sort of FOMO (fear of missing out) mentality. The markets are largely ignoring events in the Middle East. US Treasury yields recorded a moderate rise over the course of the month.

Note: Please note that an investment in securities entails risks in addition to the opportunities descibed.

 

Macro Overview

Industrial metals, including copper, zinc and iron ore, rose, driven in part by the ongoing expansion of AI and data centre infrastructure. Precious metals, by contrast, tended to trade sideways. Oil and oil derivatives (diesel, chemical prices) and agricultural commodities rose, driven by higher input costs and increasingly adverse weather conditions (severe droughts in the US and parts of Europe). The current environment bears similarities to the 2022/2023 period, when rising commodity prices drove up inflation. The key difference from that time lies with consumers and the labour market, which this time is likely to offer less scope for wage increases, meaning that inflation will lead to greater losses in real wages.

Fed Chair Powell held his final press conference following the meeting, which brought no change to US key interest rates. There remain significantly differing views among the Board members regarding the impact of high oil prices on the inflation outlook. Future Chair Kevin Warsh will not find it easy to secure a broad consensus or supporters for interest rate cuts (as Donald Trump is demanding). His idea of soon giving greater weight to so-called ‘trimmed-mean’ inflation (which has so far been lower than other inflation figures) is also viewed by many as ‘manipulation’ designed to make future interest rate cuts possible. In the case of trimmed-mean inflation, services and goods with the largest or smallest price changes are removed from the basket of goods to create a ‘more stable’ measure. However, the period 2022–2023 shows that this measure of inflation is not more stable, but merely reacts with a time lag to price rises in goods and services because the ‘leading indicators’ of inflation have been removed. 

At the long end of the US yield curve, yields remain close to the psychologically significant 5% threshold (the US Treasury had previously issued verbal warnings should this level be breached on a sustained basis). Should the Fed fail to raise key interest rates in the face of rising inflation and stable growth, the middle of the yield curve (3–10 years) could come under even greater pressure. 

There is still no sustainable solution to the Iran conflict. Mutual blockades of ships by the US and Iran continue, and the US is playing for time here. From a strategic perspective, high oil prices (export revenues), robust stock markets and stable growth driven by AI place the US in a stronger position than Iran, as the country is known to be heavily reliant on export revenues from the oil sector and a prolonged blockade could damage oil production in the long term due to a lack of storage capacity.  

Emerging Markets Overview

In China, oil stocks remained stable at 1.8 billion barrels in March, although this represents an increase of 400 million barrels compared with the previous year. China’s economy remains divided, with a strong export sector and industrial investment on the one hand, and relatively weak consumption, services and construction on the other. Export companies are planning price increases due to rising input costs, which could signal an end to the previous deflationary – and thus price-dampening – international trade environment.

In Indonesia, the trade balance improved in March, a result of continued weak consumer spending and a correspondingly sharper decline in imports compared with exports. The currency continued to depreciate during the month, much like the Indian rupee, which is also subject to heavy intervention by the central bank. In April, India paid 90% more for fertiliser for the coming agricultural season compared to prices before the Iran war, a clear sign of how rising oil prices are affecting the agricultural sector.

In Peru, there was still no election result, and in Colombia, pollsters are forecasting mixed results for the presidential election in May. In Colombia, Populist measures such as a significant increase in the minimum wage and the strong influence of cartels in rural areas are bolstering the left-wing candidate, whose election would trigger a sharp negative market correction – we have reduced our country weighting accordingly. 

In Mexico, growth indicators such as GDP growth (barely above zero) and industrial production are rather weak. The President’s programme to revive the economy is showing little success so far, despite supportive interest rate cuts. Companies and economic actors are adopting a wait-and-see approach, particularly regarding what the renegotiation of the trade agreement with the US will bring in the coming months. 

In 2026, Argentina will receive over USD 7 billion from the US-based IDB. Thanks to further loans, successful local USD bond issues and high export revenues, the country will manage this year without having to rely on international bond markets.  

Overview of EM Companies

The EM corporate figures published so far paint a generally positive picture. Alpek and Orbia in the chemicals sector reported better results thanks to the sharp rise in chemical prices such as PE, PP and PVC. At Cemex and GCC, the strong figures from their US subsidiaries were evidence of the AI data centre expansion boom in the US and, soon, in Mexico too. The figures from Liverpool in Mexico (shopping centres, retail) were somewhat weaker (due, among other things, to the safety measures in March) and signalled a weak consumer climate, but debt levels remained low. Fibra Prologis, the leading landlord of offices, logistics and industrial premises in Mexico, also delivered strong, stable figures, with the vacancy rate remaining low and stable. Aeromexico had a strong first quarter with reduced debt, but high kerosene costs will weigh on results in the coming quarter. The company, which has a strong presence on international routes, expressed confidence that cost increases in the coming quarters, similar to 2022/2023, can be passed on to consumers.  

Note: The companies mentioned in this article are selected for illustrative purposes only and do not constitute an investment recommendation.

Outlook & Performance

Due to a more defensive positioning in light of the war in Iran, our fund delivered a slightly weaker performance and is thus in the middle of the peer group.  

Note: Investments in securities entail risks in addition to the opportunities described.

Performance opportunities for the funds:

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


     

Performance risks for the funds:

  • Current macroeconomic developments carry the risk of stagflationary dynamics. With potentially negative implications for global economic growth, central banks’ interest rate policies and corporate earnings.

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 April 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 30.4.2026

Ratings

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

Morning Star Rating:                5 Stars
Morning Star Sust. Globes:     3 Globes
Scope Rating:                           A – 99/100

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.