Senior Credit Analyst - Emerging Markets, EM Spreads

Leandro Gubler

Senior Credit Analyst - Emerging Markets

EM Spreads

Credit

<ul>
<li>We upgraded Suzano’s 2031s and 2032s to Outperform, while maintaining the rest of the curve at Market Perform.</li>
<li>Suzano posted strong 4Q24 results. Supported by the Pulp segment outperforming despite pricing headwinds. EBITDA reached R$6.5 billion, down a modest 0.6% QoQ but 5.3% above expectations</li>
<li>From a credit perspective. Suzano's results showed improved LTM EBITDA and positive net free cash flow, but net leverage rose slightly to 3.3x due to FX-driven debt increases.</li>
</ul>


We upgraded Suzano’s 2031s and 2032s to Outperform, while maintaining the rest of the curve at Market Perform.
Suzano posted strong 4Q24 results. Supported by the Pulp segment outperforming despite pricing headwinds. EBITDA reached R$6.5 billion, down a modest 0.6% QoQ but 5.3% above expectations
From a credit perspective. Suzano's results showed improved LTM EBITDA and positive net free cash flow, but net leverage rose slightly to 3.3x due to FX-driven debt increases.


Suzano 4Q24: 2031s & 2032s Offer Value as Fundamentals Strengthen

<ul>
<li>Within Suzano’s capital structure, we prefer the 3.750% 2031 and 3.125% 2032 bonds, as they compare favorably to select peers, the broader EM BBB Index, and the US BBB Index.</li>
<li>Uncertainty over Brazil’s economic outlook, including currency weakness and fiscal challenges, along with potential trade policy risks under the new US administration, increases headline risk and limits upside potential.</li>
<li>Suzano is the world's largest producer of eucalyptus pulp and a leading integrated pulp and paper company.</li>
</ul>


Within Suzano’s capital structure, we prefer the 3.750% 2031 and 3.125% 2032 bonds, as they compare favorably to select peers, the broader EM BBB Index, and the US BBB Index.
Uncertainty over Brazil’s economic outlook, including currency weakness and fiscal challenges, along with potential trade policy risks under the new US administration, increases headline risk and limits upside potential.
Suzano is the world's largest producer of eucalyptus pulp and a leading integrated pulp and paper company.


Initiating Coverage on SUZANO: Headline Risk Limits Upside Potential

Managing Director, Leaf & Ledger Limited

Evan Campbell, CFA

Managing Director

Leaf & Ledger Limited

Formed in 2024, Leaf & Ledger is a European advisory and research firm serving institutional investors and managers. We focus on real assets and private markets, with public-market read-throughs where material. Our work emphasises valuation signals, market structure, and execution topics that translate technical assessment into underwriting and strategy.

Insight That Moves Capital

Cross Asset Strategy

<ul>
<li>
 High miss probability: Suzano has $2.75B SLBs. The 2031 SPT needs 2025 intensity to fall 14% YoY, while the largest one-year reduction since 2019 is ≈2.9%. A miss is likely.</li>
<li>
 Catalyst within months: Observation windows end YE 2025 and 2026. Coupons reset from July and September 2026. Vendor updates often lag disclosure, creating a tradable timing gap.</li>
<li>
 How to position: Accumulate select SLBs into verification for carry when SPTs miss. Trade equity around KPI disclosures as a read on efficiency and capex cadence.</li>
</ul>



 High miss probability: Suzano has $2.75B SLBs. The 2031 SPT needs 2025 intensity to fall 14% YoY, while the largest one-year reduction since 2019 is ≈2.9%. A miss is likely.

 Catalyst within months: Observation windows end YE 2025 and 2026. Coupons reset from July and September 2026. Vendor updates often lag disclosure, creating a tradable timing gap.

 How to position: Accumulate select SLBs into verification for carry when SPTs miss. Trade equity around KPI disclosures as a read on efficiency and capex cadence.


<ul>
<li>Argentina’s election setback hit bonds, peso, and equities, reviving “Kicillof risk” and raising concerns over reform momentum, legislative gridlock, and elevated political risk premia.</li>
<li>Suzano priced $1bn 2036s inside guidance, highlighting strong demand and proactive liability management, while Pemex’s $9.9bn buyback and Moody’s B1 upgrade underscored sovereign support.</li>
<li>Markets diverged: LatAm credit widened on Argentine risk, EM and U.S. indices tightened, Argentina’s equities plunged, Brazil and Mexico rallied, oil softened, and U.S. Treasury yields declined.</li>
</ul>


Argentina’s election setback hit bonds, peso, and equities, reviving “Kicillof risk” and raising concerns over reform momentum, legislative gridlock, and elevated political risk premia.
Suzano priced $1bn 2036s inside guidance, highlighting strong demand and proactive liability management, while Pemex’s $9.9bn buyback and Moody’s B1 upgrade underscored sovereign support.
Markets diverged: LatAm credit widened on Argentine risk, EM and U.S. indices tightened, Argentina’s equities plunged, Brazil and Mexico rallied, oil softened, and U.S. Treasury yields declined.


<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

Brazil

Suzano S.A. develops sustainable and innovative solutions from renewable sources. The Company offers cellulose, hygiene, lignin, eucalyptus, and paper products. Suzano serves clients worldwide.

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Suzano (SUZ US)

Suzano 4Q24: 2031s & 2032s Offer Value as Fundamentals Strengthen

Suzano's strong 4Q24 results lead to upgraded bond ratings, with EBITDA surpassing expectations despite pricing challenges and slight increase in...

Leandro Gubler

Initiating Coverage on SUZANO: Headline Risk Limits Upside Potential

Suzano's bond offerings stand out among peers, but economic uncertainty in Brazil and trade risks pose challenges for the world's largest...

Leandro Gubler

Suzano SLBs, High Miss Risk Into 2026

Suzano's $2.75B SLBs face high miss risk as 2031 SPT needs intensity to drop 14% YoY. Watch for catalysts by YE 2025, and position accordingly for...

Evan Campbell, CFA

EM Spreads - Weekly News & Views

Argentina's election setback impacts bonds, peso, and equities, raising concerns over reform momentum and political risk, while LatAm credit...

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

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52-week Range

Market Cap (USDm)

P/E

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Suzano 4Q24: 2031s & 2032s Offer Value as Fundamentals Strengthen

​Suzano's strong 4Q24 results lead to upgraded bond ratings, with EBITDA surpassing expectations despite pricing challenges and slight increase in...

Leandro Gubler

Initiating Coverage on SUZANO: Headline Risk Limits Upside Potential

​Suzano's bond offerings stand out among peers, but economic uncertainty in Brazil and trade risks pose challenges for the world's largest...

Leandro Gubler

Suzano SLBs, High Miss Risk Into 2026

​Suzano's $2.75B SLBs face high miss risk as 2031 SPT needs intensity to drop 14% YoY. Watch for catalysts by YE 2025, and position accordingly for...

Evan Campbell, CFA

EM Spreads - Weekly News & Views

​Argentina's election setback impacts bonds, peso, and equities, raising concerns over reform momentum and political risk, while LatAm credit...

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

Suzano's strong 4Q24 results lead to upgraded bond ratings, with EBITDA surpassing expectations despite pricing challenges and slight increase in...

Suzano's bond offerings stand out among peers, but economic uncertainty in Brazil and trade risks pose challenges for the world's largest...

Suzano's $2.75B SLBs face high miss risk as 2031 SPT needs intensity to drop 14% YoY. Watch for catalysts by YE 2025, and position accordingly for...

Argentina's election setback impacts bonds, peso, and equities, raising concerns over reform momentum and political risk, while LatAm credit...

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