EM Sovereign Credit Strategy: At this rate, spreads can stay quite tight

Research evidence excerpt

EM Sovereign Credit Strategy: At this rate, spreads can stay quite tight

J P M O R G A N Global Markets Strategy

21 July 2026

EM Sovereign Credit Strategy

At this rate, spreads can stay quite tight

Emerging Market Research

Ben Ramsey AC

(1-212) 834-4308

benjamin.h.ramsey@jpmorgan.com

J.P. Morgan Securities LLC

• Absent risks to global growth, EM sovereigns spreads should stand firm in the Nishant(44 20) 3493-3859M Poojary, CFA AC

face of renewed conflict in the Middle East. Recent EM sovereign spread- nishant.m.poojary@jpmorgan.com

widening episodes have repeatedly proved fleeting, and we expect any value J.P. Morgan Securities plc

AC in spreads to continue attracting buyers. Leonardo Tiago

• The market has been conditioned to treat shocks as temporary when growth is (1-212) 834-2479

holding up, and history suggests that high rates alone need not prevent EM leonardo.tiago@jpmorgan.com

spread-tightening when growth remains resilient and all-in yields are AC Fariha R Ahmmed

sufficiently high.

(44-20) 7134-8537

• Although EM HY bond spreads have widened materially during the recent sell- fariha.ahmmed@jpmorgan.com

off episodes, their subsequent retracement has been swift, with much of the J.P. Morgan Securities plc

peak widening reversal occurring within a month.

• While Latam bond spreads widened less than the Middle East at peak stress EMBIGD Model Portfolio Recommendations

during the US-Iran conflict, they participated fully in the subsequent Listed in order of oldest to newest

retracement tighter, and the Middle East underperformed given its proximity

OW UW

to conflict risk; this supports our view that Latam is relatively better insulated

Argentina Indonesia

from risk episodes even if not immune to global beta.

Ecuador Uruguay