17. Februar 2021

EM EUR bonds offering an attractive pickup

In Kürze

EM USD bonds total return has been hit by the increase of long-term US rates while EM EUR bonds have proved to be more resilient since the last summer rally. The recent rapid rise of the long-term US rates is raising the question of the EM USD bonds' attractiveness.

Highlights:

Despite the recent rise of US rates, we remain positive EM USD bonds in the long term.
That said, for European investors, EM EUR bonds are more attractive. We screened 375 USD/EUR bond pairs across the EM sovereign universe and we found that EM EUR bonds are currently offering one of the largest pickup over EM USD bonds since January 2020.
In the IG space, we see value to switch from Romania USD bonds into Romania EUR bonds. Likewise, Kazakhstan, Mexico, and Chile EUR bonds are offering a significant pickup over USD bonds. On the other hand, Saudi Arabia USD bonds are more attractive.
In the HY space, valuations are more dispersed and erratic, but we see value to switch into Egypt and Ukraine USD bonds from EUR bonds.

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EM EUR bonds offering an attractive pickup

17. Februar 2021