Senior Credit Analyst - Emerging Markets, EM Spreads

Leandro Gubler

EM Spreads is an independent credit research service specializing in Emerging Markets, primarily focusing on Latin American issuers.

Senior Credit Analyst - Emerging Markets

Brazil Sovereign Debt: External Strength, Fiscal Drift

Argentina Sovereign Debt: Normalization Trade, Not Normalized Credit

EM Spreads

Credit

<ul>
<li>Neutral from Underweight: Flávio Bolsonaro's first-round lead and PL's gains in Congress remove most event risk, but we think markets are pricing consolidation before any fiscal framework exists.</li>
<li>Fiscal arithmetic unchanged: Gross debt rises to 102.3% of GDP by 2028 on a near-zero primary balance; the 2027 budget stays with the outgoing Congress, delaying execution.</li>
<li>Valuation caps upside: Brazil 2035s offer 8 bps over Mexico 2034s after 28 bps of compression in three weeks; we stay defensive and favor switching out of the 2041s.</li>
</ul>


Neutral from Underweight: Flávio Bolsonaro's first-round lead and PL's gains in Congress remove most event risk, but we think markets are pricing consolidation before any fiscal framework exists.
Fiscal arithmetic unchanged: Gross debt rises to 102.3% of GDP by 2028 on a near-zero primary balance; the 2027 budget stays with the outgoing Congress, delaying execution.
Valuation caps upside: Brazil 2035s offer 8 bps over Mexico 2034s after 28 bps of compression in three weeks; we stay defensive and favor switching out of the 2041s.


Brazil Sovereign Debt: The Ballot Moved, the Budget Has Not

iShares MSCI Brazil Small-Cap

Brazil Sovereign Debt: The Ballot Moved, the Budget Has Not