MNI EM Credit Weekly

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EXECUTIVE SUMMARY:

• EM $ index spreads continued to grind tighter on the back of tariff agreements in ASIA and reprieves in LATAM. The IMF upgraded its 2025 EM growth forecast, largely attributed to China. The new issue market was subdued, with limited activity in ASIA and CEEMEA, with Mexico the main $ issuer
• ASIA $ benchmark spreads tightened by 1–2bp, while LATAM was 2–4bp tighter and CEEMEA 3-5bp tighter.
• In ASIA, Korea, Thailand & Malaysia agreed tariff deals with the US. The IMF raised growth forecasts, notably for China and Malaysia, while we see risks to the Philippines’ economy, as call centres move to AI platforms. Finally, SK Innovation’s announced weak results.
• In CEEMEA, Turkish bank earnings reflected market volatility, but lower inflation and a loosening rate environment bode well for H2.  Hungary cut its GDP growth forecast, which was largely expected.
• In LATAM, the IMF approved $2bn disbursement for Argentina, while Brazil and Mexico currently enjoy temporary tariff relief. Mexico’s supported Pemex via structured P-cap notes. Braskem and Vale reported decent results.
• A rising volume of earnings—typically not a major driver of spreads—coupled with the classic summer lull and limited new issuance, should keep spreads anchored at or near the tight end of their YTD ranges.