Weekly Newsletter

Executive Summary: EM credit markets remained resilient despite late-week risk reduction, with EM HY outperforming IG. CEEMEA and LatAm rallied early on easing Middle East tensions before consolidating. Key developments included Romania’s political agreement on euro adoption, Argentina’s renewal of its China swap line, and a ceasefire breakdown in southern Lebanon following Israeli airstrikes. Corporate earnings were mixed across emerging markets.

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*Weekly Snapshot: Key Drivers & Regional Flows*

Regional Credit Developments

🌍 Europe Credit

• Romania: Political parties reached agreement on euro adoption, including maintaining fiscal trajectory and preparing 2027 budget before year-end. Fitch affirmed sovereign at BBB-. US dollar curve 5 bps tighter, euro curve flat on the week.
• Latvia / AirBaltic: Bondholder meeting on Monday lacked quorum and was rescheduled to August 17. Bonds down 2.50 points on the week.

🌍 Middle East & Africa Credit

• Lebanon: Ceasefire in southern Lebanon broken on Wednesday after Israel launched air strikes in response to claimed Hezbollah violations. Curve rallied 0.375 points on the week, supported by IMF engagement and Israel-Lebanon discussions in Rome.
• Ghana / Kosmos Energy: Reported better-than-expected 2Q26 results on Monday. Bonds flat to up 0.375 points on the week.
• Ghana / Tullow Oil: Revised 2026 free cash flow guidance upward on Wednesday. Bonds unchanged on the week.
• Egypt: Bonds gained as much as 3.4 points on the week.
• Kenya: Bonds outperformed following lower oil prices.
• Senegal: Bonds supported by news that World Bank will provide CFA340 billion of financing over the next decade.
• Gabon: Bonds underperformed after a strong prior run.
• Democratic Republic of Congo: Bonds pressured by reports that government banned exports of copper and cobalt concentrates.

🌎 Latin America Credit

• Venezuela: Government and opposition members started political dialogue, planning to remain in continuous sessions until August 12. Sovereign curve up 1.375 points and PDVSA curve up 0.50-0.75 points on the week.
• Argentina: Government renewed US$19 billion China swap line for five years on Wednesday, covering entire swap line with activated portion remaining at approximately US$5 billion. Separately, Bloomberg reported Thursday that Milei government likely to pass BCRA charter reform by early September. Bonds closed 40-65 cents lower over week and CDS widened materially.
• Peru: Remained one of most actively traded sovereigns in region, with real-money buyers supporting curve.
• Chile: Continued to attract demand and was described as one of cheapest IG sovereigns in region.
• Mexico / Aeromexico: Reported July passenger traffic of 2.16 million, down 6.1% year on year, with load factor at 88.0% versus 88.5% a year earlier. Bonds up 0.75 points on the week.
• Brazil / Latam Airlines: Reported 2Q26 net income of US$125 million, down 48% year on year, versus Bloomberg consensus of US$17.5 million. Bonds up 0.75 points on the week.
• Brazil / Azul: Brazil’s antitrust watchdog CADE approved without restriction American Airlines’ acquisition of approximately 8% minority stake. Bonds up 2.0 points on the week.
• Brazil / Aegea: Reported mixed 2Q26 results with continued recovery in underlying operating performance following accounting restatements and persistently high cash burn. Executed recently approved BRL2.1 billion capital raise. CFO stated company evaluating possibility of debt repurchase using proceeds. Bonds up 0.875 to 1.125 points on the week.
• Brazil / CSN: Bloomberg reported Monday that Steinbruch considering keeping minority stake in cement unit. Front-end bonds fell 3-4 points post-news, then recovered after Wednesday headline that CSN abandoned plan to retain minority stake and seeking at least BRL15 billion from whole cement business sale. Bonds down 5.25 to 3.75 points on the week with front-end underperforming.

🌏 Asia Credit

• West China Cement: Issued profit warning on Friday after close, expecting 1H26 profit attributable to owners to fall 45-50% year on year to RMB374.2-411.6 million from RMB748.3 million a year earlier, citing lower ASPs and volumes. Bonds rose 5 points on the week.
• Zhongsheng Group: Repurchased US$117.91 million of bonds in open market, leaving US$482.09 million outstanding. Bonds traded up 2 points to 93/94.
• Hong Kong insurance and bank sectors: Bonds fell after reports that China expanded personal income tax to include returns from insurance policies in Hong Kong at 20% tax rate on returns.
• Japan / Nissan Motor: Reported 1QFYE27/3 operating income of JPY78 billion versus Bloomberg consensus of JPY6 billion. Management left FY27/3 forecast unchanged. US$ bonds up 0.25 to 0.50 points on the week.
• Japan / SoftBank Group: Reported 1QFYE27/3 NAV of JPY72.3 trillion, a record high, and LTV of 13% versus 17% in prior quarter. Secured US$10 billion loan backed by OpenAI shares. Senior unsecured and subordinated bonds unchanged on the week.
• South Korea / SK hynix: Moody’s upgraded to A3.
• India / SAIL: Fitch downgraded to BB from BB+.
• Laos / utility: Printed US$300 million 5-year deal at 11.125% yield. Bonds up 3 points.
• Mongolia / Mongolian Mining: Issued positive profit alert expecting consolidated net profit of approximately US$100-110 million for 1H26 versus consolidated net loss of US$19.9 million for six months ended June 30, 2025, driven by increased washed coking coal sales volume, improved ASP, and gold mine production commencement.

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This document is strictly confidential and is being provided to you for informational purposes only. It does not constitute an offer to sell or a solicitation of an offer to buy any securities or financial instruments. The information contained herein has been obtained from sources believed to be reliable but is not guaranteed as to accuracy or completeness. Opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice.

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