Senior Credit Analyst - Emerging Markets, EM Spreads

Leandro Gubler

Senior Credit Analyst - Emerging Markets

EM Spreads

Credit

<ul>
<li>4Q24 results: Minerva - acquisition outlook and market tailwinds support credit upgrade, YPF - strategic progress offset weak quarter, and Pemex - high carry but risk outweigh rewards. </li>
<li>Argentina 4Q24 GDP Beats Expectations, but Outlook Hinges on Policy and IMF Deal</li>
<li>Sheinbaum Restructures Pemex to Strengthen State Control - Pemex’s elevated leverage, continued E&amp;P underperformance, and exposure to refining losses remain key concerns.</li>
</ul>


4Q24 results: Minerva - acquisition outlook and market tailwinds support credit upgrade, YPF - strategic progress offset weak quarter, and Pemex - high carry but risk outweigh rewards. 
Argentina 4Q24 GDP Beats Expectations, but Outlook Hinges on Policy and IMF Deal
Sheinbaum Restructures Pemex to Strengthen State Control - Pemex’s elevated leverage, continued E&amp;P underperformance, and exposure to refining losses remain key concerns.


<ul>
<li>Weak 4Q24 results, rising leverage, and lack of a clear plan heighten credit concerns.</li>
<li>We downgrade Pemex to Underperform. In our view, the absence of a clear financial plan under the current circumstances significantly undermines Pemex’s management credibility in addressing its serious debt challenges.</li>
<li>From a credit perspective, results were marked by a 27.1% sequential decline in LTM adjusted EBITDA, while total debt decreased by $2.1 billion.</li>
</ul>


Weak 4Q24 results, rising leverage, and lack of a clear plan heighten credit concerns.
We downgrade Pemex to Underperform. In our view, the absence of a clear financial plan under the current circumstances significantly undermines Pemex’s management credibility in addressing its serious debt challenges.
From a credit perspective, results were marked by a 27.1% sequential decline in LTM adjusted EBITDA, while total debt decreased by $2.1 billion.


PEMEX 4Q24: High Carry, But Risks Outweigh Rewards

<ul>
<li>We need to see concrete action from the Mexican government to maintain an Outperform recommendation.</li>
<li>Pemex’s deteriorating operational metrics will likely increase its need for government assistance.</li>
<li>Within Pemex’s capital structure, we continue to prefer the PEMEX (B3/BBB/B+) 5.950% 2031, the PEMEX 6.625% 2035, the PEMEX 6.625% 2038, and the PEMEX 7.690% 2050.</li>
</ul>


We need to see concrete action from the Mexican government to maintain an Outperform recommendation.
Pemex’s deteriorating operational metrics will likely increase its need for government assistance.
Within Pemex’s capital structure, we continue to prefer the PEMEX (B3/BBB/B+) 5.950% 2031, the PEMEX 6.625% 2035, the PEMEX 6.625% 2038, and the PEMEX 7.690% 2050.


Pemex: Lack of Concrete Action Weights on the Outperform Thesis

<ul>
<li>The LatAm Corporate Index widened by 4 bps to 317 bps in the week ended Wednesday, January 15, 2025. </li>
<li>YPF Priced $1.1bn Bond Due 2034 at 8.5% Yield. PEMEX Commits to Settling Supplier Debts by March</li>
<li>Moody’s Upgrades Ratings of Argentine Non-Financial Companies Following Country Ceiling Adjustment</li>
</ul>


The LatAm Corporate Index widened by 4 bps to 317 bps in the week ended Wednesday, January 15, 2025. 
YPF Priced $1.1bn Bond Due 2034 at 8.5% Yield. PEMEX Commits to Settling Supplier Debts by March
Moody’s Upgrades Ratings of Argentine Non-Financial Companies Following Country Ceiling Adjustment


<ul>
<li>LatAm credit markets ended the week mixed as the LatAm Aggregate Index widened to 280 bps while EM spreads and U.S. yields remained stable.</li>
<li>In 2Q25 earnings, Vista, Minerva, and YPF delivered strong results supporting Overweight views, while Suzano, Cemex, and Telecom face spread constraints amid operational pressures.</li>
<li>MercadoLibre’s growth remains solid but limited spread compression, and Pemex benefits from government support.</li>
</ul>


LatAm credit markets ended the week mixed as the LatAm Aggregate Index widened to 280 bps while EM spreads and U.S. yields remained stable.
In 2Q25 earnings, Vista, Minerva, and YPF delivered strong results supporting Overweight views, while Suzano, Cemex, and Telecom face spread constraints amid operational pressures.
MercadoLibre’s growth remains solid but limited spread compression, and Pemex benefits from government support.


Weekly News & Views - 2Q25 Earnings Recap

Mexico

Petroleos Mexicanos operates as an oil and gas exploration and production services. The Company offers pipeline carriage, petrochemical distributor and shipping centers, logistics, and fuel commercialization services. Petroleos Mexicanos serves customers in Mexico.

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Petroleos Mexicanos (1232Z MM)

Weekly News & Views – Mar 21, 2025

4Q24 results show Minerva improving, YPF progressing, but Pemex remains high risk. Argentina's GDP beat estimates, but outlook depends on policy...

Leandro Gubler

PEMEX 4Q24: High Carry, But Risks Outweigh Rewards

Pemex's weak 4Q24 results, rising leverage, and lack of clear financial plan lead to credit concerns, prompting a downgrade to Underperform.

Leandro Gubler

Pemex: Lack of Concrete Action Weights on the Outperform Thesis

Mexican government must take action to support Pemex as operational metrics worsen, specific bonds recommended for investment.

Leandro Gubler

EM Spreads – Weekly News & Views

LatAm Corporate Index widens, YPF prices $1.1bn bond, PEMEX commits to settling debts, Moody's upgrades Argentine companies.

Leandro Gubler

Weekly News & Views - 2Q25 Earnings Recap

LatAm credit markets show mixed results, with some companies delivering strong earnings while others face operational pressures.

Leandro Gubler

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Weekly News & Views – Mar 21, 2025

4Q24 results show Minerva improving, YPF progressing, but Pemex remains high risk. Argentina's GDP beat estimates, but outlook depends on policy...

Leandro Gubler

PEMEX 4Q24: High Carry, But Risks Outweigh Rewards

​Pemex's weak 4Q24 results, rising leverage, and lack of clear financial plan lead to credit concerns, prompting a downgrade to Underperform.

Leandro Gubler

Pemex: Lack of Concrete Action Weights on the Outperform Thesis

​Mexican government must take action to support Pemex as operational metrics worsen, specific bonds recommended for investment.

Leandro Gubler

EM Spreads – Weekly News & Views

​LatAm Corporate Index widens, YPF prices $1.1bn bond, PEMEX commits to settling debts, Moody's upgrades Argentine companies.

Leandro Gubler

Weekly News & Views - 2Q25 Earnings Recap

​LatAm credit markets show mixed results, with some companies delivering strong earnings while others face operational pressures.

Leandro Gubler

Pemex's weak 4Q24 results, rising leverage, and lack of clear financial plan lead to credit concerns, prompting a downgrade to Underperform.

Mexican government must take action to support Pemex as operational metrics worsen, specific bonds recommended for investment.

LatAm Corporate Index widens, YPF prices $1.1bn bond, PEMEX commits to settling debts, Moody's upgrades Argentine companies.

LatAm credit markets show mixed results, with some companies delivering strong earnings while others face operational pressures.