Senior Credit Analyst - Emerging Markets, EM Spreads

Leandro Gubler

Senior Credit Analyst - Emerging Markets

EM Spreads

Credit

JBS N.V. operates as a meat processing company. The Company produces and delivers fresh and frozen beef, poultry, pork, fish, and lamb products to retailers and food-service customers. JBS serves customers worldwide.

<ul>
<li>Long end offers attractive value, with 2053s providing compelling carry-to-duration and 35–65 bps of extra spread versus Tyson and key LatAm peers.</li>
<li>We maintain a constructive view of JBS’s credit profile, supported by diversification, global scale, solid liquidity, and manageable leverage consistent with investment-grade metrics.</li>
<li>A broadly supportive global protein backdrop reinforces earnings resilience across proteins, while healthier conditions in Brazil and Australia help offset ongoing margin pressure in North America Beef.</li>
</ul>


Long end offers attractive value, with 2053s providing compelling carry-to-duration and 35–65 bps of extra spread versus Tyson and key LatAm peers.
We maintain a constructive view of JBS’s credit profile, supported by diversification, global scale, solid liquidity, and manageable leverage consistent with investment-grade metrics.
A broadly supportive global protein backdrop reinforces earnings resilience across proteins, while healthier conditions in Brazil and Australia help offset ongoing margin pressure in North America Beef.


JBS 3Q25: Solid Top-Line Growth as Pricing Strength Offsets Mixed Margins

Telecom Argentina SA provides telecommunications services including local, long-distance and international service in Argentina.  The Company, through its subsidiaries, also provides cellular telecommunications services and offers paging services.

<ul>
<li>We upgrade Telecom Argentina to Overweight as the TMA acquisition strengthens its market position, supports operating momentum, and benefits from reduced political risk and improving macro stability.</li>
<li>Regulatory uncertainty remains meaningful, and we think clearer visibility on the Telefónica approval process and integration timeline will be critical for value realization and credit performance.</li>
<li>• We see more value in the TEOAR 2031s given their lower duration, attractive relative spreads versus the EM B Index and peers, and supportive operating trends despite weak liquidity.</li>
</ul>


We upgrade Telecom Argentina to Overweight as the TMA acquisition strengthens its market position, supports operating momentum, and benefits from reduced political risk and improving macro stability.
Regulatory uncertainty remains meaningful, and we think clearer visibility on the Telefónica approval process and integration timeline will be critical for value realization and credit performance.
• We see more value in the TEOAR 2031s given their lower duration, attractive relative spreads versus the EM B Index and peers, and supportive operating trends despite weak liquidity.


Telecom 3Q25: Stronger Margins and a More Constructive Outlook

Gerdau S.A. provides steel-related products and services worldwide. The company operates through Brazil Operations, North America Operations, South America Operations, and Special Steel Operations. It offers semi-finished products, such as billets, blooms, and slabs; common long rolled products, including rebars, merchant bars, and profiles that are used by the construction and manufacturing industries; and drawn products consisting of barbed and barbless fence wire, galvanized wire, fences, concrete reinforcing wire mesh, nails, and clamps, as well as mines and produces iron ore. It also produces special steel products for use in auto parts, light and heavy vehicles, and agricultural machinery, as well as oil and gas, wind energy, machinery and equipment, mining and rail, and others markets. In addition, it provides Flat Products, such as hot rolled coils and heavy plates; and resells flat steel products. The company sells its products through independent distributors, direct sales from the mills, and its retail network. The company was founded in 1901 and is based in Porto Alegre, Brazil. Gerdau S.A. is a subsidiary of Metalurgica Gerdau S.A.

<ul>
<li>Persistent pricing pressure in Brazil limits margin recovery, while reduced future investments highlight challenges; stronger trade-defense measures will be needed to restore competitiveness.</li>
<li>North America remains Gerdau’s key earnings driver, supported by tariffs, healthy construction demand, and a resilient balance sheet that underpins credit strength.</li>
<li>We maintain Neutral, seeing limited spread-compression potential; we find greater value in the 2044s for their yield pickup and see overall valuations close to fair value across the curve.</li>
</ul>


Persistent pricing pressure in Brazil limits margin recovery, while reduced future investments highlight challenges; stronger trade-defense measures will be needed to restore competitiveness.
North America remains Gerdau’s key earnings driver, supported by tariffs, healthy construction demand, and a resilient balance sheet that underpins credit strength.
We maintain Neutral, seeing limited spread-compression potential; we find greater value in the 2044s for their yield pickup and see overall valuations close to fair value across the curve.


Gerdau 3Q25: North America Drives Earnings as Brazil Margins Compress

Companhia Siderurgica Nacional S.A. (CSN) manufactures iron and steel in Brazil. The Company operates mines, an integrated steel mill, service centers, ports, and railroads.  CSN manufactures and distributes hot-rolled, cold-rolled, and galvanized steel products to the automobile, auto parts, civil construction, electrical equipment, and packaging industries.

<ul>
<li>We maintain Overweight on the 2031s and 2032s for their attractive carry, meaningful spread pickup versus LatAm BB peers, and stronger downside protection at current discounted prices.</li>
<li>We think credit metrics will remain stable, supported by strong liquidity covering maturities through 2027, easier-to-roll bank debt, and expected EBITDA improvement from recovering steel and resilient mining.</li>
<li>We see potential spread compression from recovering steel prices, protectionist measures, asset-sale-driven deleveraging, and solid operating assets, reinforcing the bonds’ attractive relative value at current wide levels.</li>
</ul>


We maintain Overweight on the 2031s and 2032s for their attractive carry, meaningful spread pickup versus LatAm BB peers, and stronger downside protection at current discounted prices.
We think credit metrics will remain stable, supported by strong liquidity covering maturities through 2027, easier-to-roll bank debt, and expected EBITDA improvement from recovering steel and resilient mining.
We see potential spread compression from recovering steel prices, protectionist measures, asset-sale-driven deleveraging, and solid operating assets, reinforcing the bonds’ attractive relative value at current wide levels.


CSN 3Q25: Mining Strength Offsets Steel Weakness

Braskem S.A. produces petrochemicals and generates electricity.  The Company produces ethylene, propylene, benzene, toluene, xylenes, butadiene, butene, isoprene, dicyclopentediene, MTBE, caprolactam, ammonium sulfate, cyclohexene, polyethylene theraphtalat, polyethylene, and polyvinyl chloride (PVC).

<ul>
<li>Braskem’s Overweight stance is supported by its strategic relevance and government links, with distressed bond prices already reflecting substantial downside risk.</li>
<li>We find better value in lower-priced bonds, especially the 2030 notes yielding 32.0% for a 3.0-year duration, while we see elevated risk in the 2081 hybrids.</li>
<li>Near-Term outcomes hinge on liquidity solutions, policy relief, and January coupon clarity, though recent developments and potential secured financing improve the probability of an alternative resolution.</li>
</ul>


Braskem’s Overweight stance is supported by its strategic relevance and government links, with distressed bond prices already reflecting substantial downside risk.
We find better value in lower-priced bonds, especially the 2030 notes yielding 32.0% for a 3.0-year duration, while we see elevated risk in the 2081 hybrids.
Near-Term outcomes hinge on liquidity solutions, policy relief, and January coupon clarity, though recent developments and potential secured financing improve the probability of an alternative resolution.


Braskem 3Q25: Liquidity Strain Deepens as Bonds Remain in Distressed Territory