Global EM Corporate Credit Strategy: New EM Corporate Watchlist

Research evidence excerpt

Global EM Corporate Credit Strategy: New EM Corporate Watchlist

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28 Jul 2026 10:49:14 ET │ 13 pages

Global EM Corporate Credit Strategy

New EM Corporate Watchlist

CITI'S TAKE

Alexander Rozhetskin AC

We introduce a new EM Corporate Watchlist as one tool in identifying +44-20-7508-4787

interesting bonds that might be considered when assessing for potential alexander.rozhetskin@citi.com

trade ideas based on relative underperformance or outperformance. We

remain largely constructive on EM corporate credit, but with spreads near

cycle tights, the investment case is now more about carry than

compression. Supportive technicals, resilient inflows, and a more benign

Fed backdrop continue to offset rich valuations. Geopolitical volatility and

thin summer volumes may create episodic spread widening, where

investors could add risk selectively. Overall, returns should be driven by

carry, and a relative preference for issuers with visible earnings, manageable

refinancing needs, and stronger balance sheet flexibility.

Introducing new EM Corporate Watchlist — We now offer a new EM Corporate

Watchlist as one tool in identifying interesting bonds that might be considered when

assessing for potential trade ideas, divided into Cheap Bonds, Expensive Bonds, and

Relative Value Considerations.

Constructive on EM Carry — We remain largely constructive on EM corporate credit,

with a preference for carry over spread compression. Supportive technicals and a

benign US Fed backdrop offset rich valuations, though returns should be driven

primarily by income. Geopolitical volatility may create episodic spread widening,

where investors can consider adding risk selectively with preference for issuers with

visible earnings and strong balance sheet flexibility.