EM Alpha: DomRep: Upgrade to Overweight. Tourism could be surprisingly resilient.

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EM Alpha: DomRep: Upgrade to Overweight. Tourism could be surprisingly resilient.

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EM Alpha

DomRep: Upgrade to Overweight. Tourism

could be surprisingly resilient.

DomRep EXD to OW: Island of value in an expensive region 11 May 2026

We upgrade our recommendation on the external debt (EXD) of the Dominican Republic GEM FI & FX Strategy

(DomRep) to Overweight from Marketweight. Valuations have improved versus regional Emerging Markets Global

peers (trading flat to ratings vs. BB+ valuations previously) and we think DomRep Lucas Martin, CFA

currently offers the best value among regional energy importers. The tourism sector Sovereign Debt FI Strategist

could also be more resilient than expected, likely easing investor concerns about the BofASlucas.martin@bofa.com

impact of higher energy prices. Recently announced budget cuts are also supportive. To Alexander Muller

express the view, we enter into the below relative value trade: Andean(ex-Ven) Carib Economist

BofAS

• Trade: Long DOMREP ’60s vs Short a basket of GUATEM ’55s and COSTAR alexander.muller@bofa.com

’54s Entry 53bp, Target 15bp, Stop 80bp, 10 x 4.1 x 4.1, 6m horizon. Risks to the PedroCaribbeanDiazEconomist

trade: Higher energy prices, lower growth, wider deficit, weak reform momentum. BofAS

pdiaz2@bofa.com

Tourism: Potential to capture higher market share JaneSovereignBrauerDebt FI Strategist

DomRep’s tourism sector could be resilient to an overall contraction in the global BofAS

tourism industry because it has potential to capture market share from other jane.brauer@bofa.com

destinations, such as Mexico (affected by recent incidences of violence) and Cuba DavidGlobal EMHauner,FI/FX CFAStrategist>>

(affected by shortages). In addition, DomRep is less affected by the shutdown of Spirit MLI (UK)