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

Gerdau 1Q26: North America Carries Earnings, but Valuation Limits Upside

Gerdau 2Q26: North America Delivers, Brazil Starts to Turn

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

EM Spreads

Credit

<ul>
<li>Geographic Divergence: North America remains the primary earnings driver (73% of EBITDA), providing a structural hedge against persistent import pressure and margin compression within Gerdau’s Brazilian operations.</li>
<li>Credit Stability: Conservative leverage (0.91x net) and robust liquidity through 2035 underpin a solid BBB profile, though high shareholder distributions limit the potential for further organic deleveraging.</li>
<li>Valuation Constraint: While fundamentally resilient, current tight spreads offer limited re-rating potential, making the intermediate 2035 notes the preferred entry point for balanced carry versus duration risk.</li>
</ul>


Geographic Divergence: North America remains the primary earnings driver (73% of EBITDA), providing a structural hedge against persistent import pressure and margin compression within Gerdau’s Brazilian operations.
Credit Stability: Conservative leverage (0.91x net) and robust liquidity through 2035 underpin a solid BBB profile, though high shareholder distributions limit the potential for further organic deleveraging.
Valuation Constraint: While fundamentally resilient, current tight spreads offer limited re-rating potential, making the intermediate 2035 notes the preferred entry point for balanced carry versus duration risk.


Gerdau 4Q25: North America Drives Earnings, Brazil Margins Remain Pressured