 The nascent recovery in global GDP and steel prices along with continued strength in iron ore prices provides an attractive backdrop for investors to get exposure to this key sector in our view. Steel prices are cyclical and we believe the current down-cycle which started in 2019 may have bottomed. Sequential improvement in global GDP (and China’s continued resilience) as economies come out of COVID-19 induced lockdowns is likely to help demand and steel prices improve in 2H20.  All the credits that we cover have come through this crisis relatively unscathed – yes, credit metrics have deteriorated but ratings downgrades have been limited and there have been no credit events as well. With capital market conditions and commodity prices improving, we also see liquidity as less of a concern for the coming months. If the steel cycle has bottomed as we expect, then we can potentially see most credits deleveraging from current levels over the next 12-18 months.  From a portfolio strategy perspective, we find that the performance of this sector is not directional with the broader EM corporate market at low or moderate spreads (i.e. <350bps vs 328bp currently). This means that even if CEMBI spread tightening stalls, the sector could still perform well or better. Our analysis also shows that commodity prices, although important, are not a material driver of bond spreads. Looking at the sector vs DM comps, EM BBBs appear to offer value vs DM BBBs, however the same is not the case in lower rated categories.  Since the credits in this sector are from countries with 'lively' macro stories, these tend to be important drivers of bond spreads(especially for the Russian, Ukrainian and HY Brazilian credits). Only Vale and to a lesser extent Gerdau have managedto somewhat escape their sovereign’s (i.e. Brazil) orbit. The HY credits trade sufficiently wide to their respective sovereigns and thus have scope for spread over sovereign compression as credit fundamentals improve in the coming quarters.