2H26 Convictions: finding the pockets in a tight market

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2H26 Convictions: finding the pockets in a tight market

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EM Corporate Strategy

2H26 Convictions: finding the pockets in a

tight market

Industry Overview

Outperformance comes from finding the pockets 23 July 2026

Our “2H26 Convictions” webinar this week addressed the line that opens almost every EM Corporate Strategy

EM corporate discussion: “everything is so tight.” Yet index valuations conceal Global

meaningful dispersion across sectors, issuers and bonds. Outperformance requires Anne Milne

finding pockets where valuations, fundamentals or catalysts can generate returns, while Research Analyst

avoiding those where downside is not reflected in spreads. We forecast a 5.2% EM BofAS+1 646 855 4096

corporate return in 2026, including 9.0% for HY versus 4.3% for IG, but are increasingly anne.milne@bofa.com

selective in how we take risk. Bruno Larcher

Research Analyst

The strongest 1H sectors began as laggards Merrill+55 11Lynch2188 (Brazil)4010

bruno.larcher@bofa.com

Several credits entered ‘26 at depressed valuations after facing significant pressure in

late ‘25, allowing improvements in commodities, fundamentals or sentiment to drive CarlosResearchAssumpcao,Analyst CFA

outperformance. That reset has largely played out, leaving smaller, more idiosyncratic Merrill Lynch (Brazil)

+55 11 2188 4025

opportunities. Carry remains supportive, but unlikely to differentiate on its own carlos.assumpcao@bofa.com

Opportunity pockets need visible catalysts KayResearchHopeAnalyst

MLI (UK)

We favor credits where triggers can unlock value, including Kosmos 2028-31s, CCI 2029 kay.hope@bofa.com

and selected bank capital, particularly Turkish Tier 2s and Banorte AT1s. In LatAm, we Ali Dhaloomal