News Overview

EM Corporate Bond Newsletter

July 2026

Monthly report of the fund management

Stable to slightly declining risk premiums, along with higher short-term and stable long-term US yields, characterised the month of June. The yield on two-year US government bonds rose by around 15 basis points over the course of the month, whilst longer maturities remained largely unchanged or trended slightly lower. The emerging markets corporate bonds asset class once again posted a positive return of around 0.35 per cent when calculated in euros.

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

Macro Overview

The US is currently negotiating a peace agreement with Iran, which, according to the original plans, is to be finalised by early August. During the negotiations, freedom of navigation through the Strait of Hormuz is to be guaranteed. Despite isolated incidents, this has largely been the case so far.

The oil market reacted swiftly to the peace talks. The oil price currently stands at around USD 70 per barrel. Some analysts are already anticipating an imminent oversupply in the oil market and are discussing the lack of Chinese demand to date. Chinese oil imports fell by around four million barrels per day in May, reaching their lowest level in nine years. It remains unclear whether demand will pick up again in the coming months or whether, due to the ongoing expansion of electric mobility, a structurally lower level of oil demand in China is to be expected.

It is noteworthy that short-term US yields have so far shown little reaction to the already significantly lower oil price. Instead, the focus has remained on the latest inflation data – which were still influenced by the previously higher oil price – and the resulting interest rate expectations regarding the US Federal Reserve. It remains to be seen to what extent the disinflationary effects of falling energy prices will be offset by the persistently high demand for investment linked to the expansion of data centres. In particular, strong demand for a wide variety of raw materials and intermediate goods could partially limit the decline in inflation.

Kevin Warsh’s first appearance as Chair of the US Federal Reserve met expectations for a new central bank governor and was characterised by a hawkish monetary policy tone. Speaking at an ECB symposium in late June and early July, Warsh highlighted falling inflation expectations and the continued robust economic growth in the US. The market viewed these statements positively overall, which subsequently led to falling yields at the short end of the US yield curve.

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

Emerging Markets Overview

There was comparatively little market-moving news from China in June. Alibaba was accused by Anthropic of having trained its own AI models using thousands of fake user accounts. Furthermore, the company agreed to pay USD 600 million after traders had sold illegal medicines via the platform in the US. Alibaba’s shares and bonds reacted negatively to these developments. We remain underweight in this issuer.

The recently established Indonesian sovereign wealth fund, Danantara, is considering introducing an amnesty scheme for investments in the bonds issued by Danantara. This would waive checks on the origin of the invested funds, as well as tax investigations and civil or criminal proceedings. The apparent aim is to mobilise additional capital inflows. At the same time, the proposal raises questions regarding the origin of the funds and governance standards.

Honduras is stepping up its efforts to attract foreign investment in industrial parks and energy projects. The aim is to expand the domestic manufacturing sector and create additional jobs.

Panama’s economy benefited significantly in the first quarter from the high volume of shipping through the Panama Canal – partly as a result of geopolitical tensions in the Middle East – as well as from strong growth in the tourism sector. The number of tourists was more than 14 per cent higher than in the previous year.

Conservative parties emerged victorious from the elections in Peru and Colombia. Both governments have already announced a closer alignment with the US and intend to combat organised crime, particularly drug trafficking, more resolutely. The financial markets reacted positively, thereby signalling their expectation of a sounder fiscal policy in future. However, implementing this is likely to pose a considerable challenge, particularly in Colombia.

As expected, the US under President Trump did not extend the USMCA free trade agreement. In accordance with the terms of the agreement, it will therefore automatically enter a one-year transition period. This gives the US additional room for manoeuvre in negotiations with Mexico and Canada and increases the likelihood of further concessions from both partner countries. Overall, whilst this solution is preferable to a complete termination of the agreement, it increases investment uncertainty in the economies concerned and is likely to weigh on medium-term growth. A meeting between President Trump and Mexican President Claudia Sheinbaum could take place during the G20 summit on 14 and 15 December 2026 in Miami.

In Argentina, approval ratings for President Javier Milei have improved slightly – even in those traditionally conservative parts of Buenos Aires associated with former President Kirchner’s camp. However, the fall in oil prices is having a dampening effect on the build-up of foreign exchange reserves. At the same time, 59 per cent of the population state that their monthly income is insufficient to cover the cost of living. Finance Minister Luis Caputo nevertheless remains committed to the goal of achieving an investment-grade rating for Argentina by 2031 – an ambitious project that would be exceptional by historical standards. With an eye on the 2027 presidential elections, Milei also strengthened cooperation with the PRO party: following the resignation of Chief of Staff Adorni amid unresolved allegations of corruption, he appointed Diego Santilli as his successor, thereby deepening political cooperation between the two parties against the Kirchner camp.

Ghana responded resolutely to the xenophobic protests in South Africa, which were directed, amongst other things, against illegal immigration from Ghana. The government announced that it did not expect to renew the concession for the South African mining company Gold Fields’ largest gold mine, which is due to expire in 2027, and would instead award it to local companies. Gold Fields’ share price fell by around 18% following the announcement, roughly reflecting the profit contribution of the mine in question. The company’s bonds fell by around 50 to 75 basis points. We are maintaining our overweight position, as the issuer has a very solid balance sheet even in the event of losing the concession. Net debt stands at only around 0.3 to 0.4 times EBITDA.

The Deputy Chairman of the Russian Security Council, Dmitry Medvedev, warned Armenia and Moldova against following Ukraine’s foreign policy course and continuing to pursue closer ties with the European Union.

In an effort to foster closer economic cooperation with the US, Serbia invited American companies to participate in the Djerdap 3 hydroelectric project on the Danube. The project envisages an installed capacity of up to 2.4 GW, investment costs of up to EUR 5 billion and a planned commissioning date in 2036.

The Gulf States appear to continue to approach the peace process with Iran with caution. Against this backdrop, they are pressing ahead with the construction of an oil pipeline to the coast beyond the Strait of Hormuz in order to reduce their dependence on this strategically important shipping route.

Overview of EM Companies

The fall in oil prices led to significant differentiation within the high-yield segment of the energy sector. Issuers such as Tullow, Kosmos Energy and GTE came under pressure as they have comparatively high levels of debt and a higher break-even oil price. In some cases, bond prices fell by as much as seven to eight points.

We are, however, maintaining our overweight position in PRIO in Brazil. The company continues to generate positive free cash flow even at an oil price of USD 50 per barrel.

We also remain overweight in Azule Energy, whose credit profile is equally impressive. Both issuers performed significantly more stable than the companies mentioned above, underscoring that sound company analysis can deliver decisive added value even in a strongly momentum-driven market environment.

Against the backdrop of our expectation of persistently low oil prices, we have also increased our weighting in Latin American airlines, particularly LATAM Airlines and Avianca, partly through new share issues.

Moody’s and Fitch raised Volcan’s (Peru) rating to B1 and B+ respectively. The decisive factors were the company’s low debt levels and solid earnings power in the current metal price environment. We remain slightly overweight in this issuer and consider the current yields of around 7.5% to be attractive.

In June, we also held discussions with Klabin, the integrated paper and pulp manufacturer from Brazil. The key takeaway from this discussion was that the company has set up its own working group to continuously monitor developments in China’s efforts to build a competitive pulp industry. This underscores that this sector too – much like the automotive, cement, steel and chemical industries before it – could be affected by structural overcapacity and associated price pressure in the future.

Against this backdrop, we are investing exclusively in bonds with maturities of up to five years, focusing on the Brazilian issuers Klabin and Suzano, which benefit from a particularly favourable cost structure. In our view, long-dated bonds with maturities of 30 years do not currently reflect these structural risks adequately.

We held a further company meeting with OTP Bank from Hungary. The bank has a very comfortable capital base and continues to pursue a disciplined acquisition strategy. Although it is actively seeking attractive takeover opportunities – including in Central Asia, where it is already represented in Uzbekistan through Ipoteka Bank – it consistently refrains from transactions whose valuations it considers too high. We remain significantly overweight in OTP Bank and also participated in the new issue of its subordinated euro bond.

Outlook & Performance

The fund’s performance during the reporting month largely mirrored that of the broader market. The portfolio remains fully invested. We continue to manage the portfolio’s beta specifically through individual stock selection, whilst interest rate sensitivity remains close to the benchmark.

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

Performance opportunities for the funds:

  • A possible easing of the geopolitical situation in the Middle East, together with the upcoming US mid-term elections, could create a generally calmer market environment and thus support the carry trade.
  • Falling oil prices reduce inflation risks and could increase central banks’ scope for monetary policy. 

Performance risks for the
funds:

  • Interventions by the Bank of Japan to prop up the yen could put pressure on the US government bond market, as this would require the sale of foreign exchange reserves.
  • A correction in the chip and AI rally on the equity markets could trigger an abrupt phase of heightened risk aversion, particularly given the seasonally low summer liquidity. 

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 June 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 30.6.2026

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.