State-owned enterprises IN LATAM, despite challenges such as declining output and financial difficulties, are attracting investors with high-yield bonds perceived as having similar risks to sovereign debt. Companies like Mexico’s Pemex, Peru’s PetroPeru, and Chile’s Codelco have offered returns surpassing those of government debt based on the assumption that a performing sovereign will support these entities. Across EM generally, sovereign bonds are outperforming US treasuries amid doubts about the timing and pace of the Fed’s interest rate cuts.