Morgan Stanley Global Macro Forum: Navigating LatAm Economies and Markets

Research evidence excerpt

Morgan Stanley Global Macro Forum: Navigating LatAm Economies and Markets

Valuation Methodology and Risks

Stance/Trade Date Entry Level Target Stop Rationale Risks

Mexico has significantly lagged peers and now looks very cheap, including by pricing two full USMCA negotiation entering our bear case or Brazilian polls Buy MEX Feb’35 vs BRAZIL Mar’34 15-May-26 6 -25 20 downgrades. Downgrade concerns will likely persist yet our base case sees no further rating action in strongly suggesting a shift towards fiscal consolidation 2026.

We see risk-reward as negative into the coming months. Our fiscal and rating models suggest Brazil is Brazilian polls strongly suggesting a shift towards fiscal Dislike Brazil Hard Currency Bonds 15-May-26 NA NA NA fair yet this doesn’t factor in that the elections may alter the fiscal trajectory. consolidation

Mexico has significantly lagged peers and now looks very cheap, including by pricing two full

Like Mexico Hard Currency Bonds 15-May-26 NA NA NA downgrades. Downgrade concerns will likely persist yet our base case sees no actual downgrades in USMCA negotiation entering our bear case

2026.

Argentina's bull case is currently playing out, where strong governability comes together with US A wider-than-anticipated current account deficit in addition to lack Like Argentina Hard Currency Bonds 16-Nov-25 NA NA NA support to open up the path towards market access, including potential buybacks. Valuations wise there of demand of local currency due to perceived FX overvaluation. is also still further upside versus other large African single B issuers.

Ecuador remains an improving credit story that now also sees reforms as possible due to the stronger

Like Ecuador Hard Currency Bonds 16-Nov-25 NA NA NA governability of the president.