We think Simpar’s credit profile is supported by the group’s diversified and scaled asset based services platform, which reduces reliance on any single business line and provides a degree of earnings resilience through the cycle. The group benefits from leading market positions across several segments, including truck and equipment rental at Vamos, logistics at JSL, and light vehicle rental at Movida, which we see as strengthening competitive positioning and supporting stable demand even in a weaker macro backdrop. A meaningful share of revenues is backed by medium and long term contracts and recurring activity, which we view as a key positive for cash flow visibility and predictability and as limiting exposure to Brazil’s more volatile economic cycles.

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We initiate Braskem with an Overweight recommendation, supported by our view that the company’s large domestic footprint, political relevance, and partial government ownership make a default event less likely in the near term. However, we recognize that Braskem’s credit profile now depends less on fundamentals and more on political and strategic decisions, particularly those involving Petrobras, the federal government, and the company’s ability to strengthen liquidity. We think the risk-reward remains highly asymmetric at current distressed prices, with outcomes largely contingent on the successful execution of a secured-liquidity bridge, approval of the PRESIQ tax-incentive program, direct governmental support, and sustained government support for Brazil’s petrochemical sector. We see Braskem’s bonds outperforming once a temporary liquidity buffer solution is clarified.

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We are initiating coverage on JBS with an Overweight recommendation. JBS benefits from its scale as the world’s largest protein company, with a diversified portfolio across proteins and a global footprint supported by well-recognized brands. This diversification has helped offset weaker profitability in North America, underscoring the company’s resilience and credit stability.

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Key Insights and Recommendations

We are initiating coverage on Gerdau with a Neutral recommendation. While we maintain a constructive view of Gerdau’s credit profile, the outlook for its Brazilian operations remains challenged, and we see limited room for further spread compression at current levels. That said, we find the GGBRBZ 5.750% 2035 and 7.250% 2044 bonds more attractive across the curve, offering yields of 5.8% and 6.3%, respectively, and trading wide to the US BBB curve. For US investors, this presents an attractive yield pickup opportunity within the investment-grade category.

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Key Insights and Recommendations

We are initiating coverage on CSN with an Overweight recommendation, highlighting the CSN 6.750% 2028 and 4.625% 2031 bonds as attractive across the curve, given their elevated yields of 8.8% and 9.2%, respectively, and their significant spread over the EM BB and LatAm BB curves.

CSN benefits from a vertically integrated and diversified business model across steel, mining, cement, energy, and logistics, which provides cost advantages, revenue stability, and operational synergies. Its strong domestic position in steel and cement is supported by scale, brand recognition, and efficient logistics. While exports contribute about 42% of revenue and offer FX diversification, CSN remains heavily exposed to Brazil’s macroeconomic, fiscal, and regulatory risks. The pending tax reform (Constitutional Amendment 132) could alter its cost structure, adding uncertainty to its domestic outlook. The credit story is constrained by high leverage and a significant interest burden. CSN is also exposed to commodity cycles, particularly fluctuations in iron ore and steel prices, a disruptive increase in Chinese exports, and a capital-intensive growth plan that limits financial flexibility. These pressures are somewhat mitigated by CSN’s strong liquidity position, which could be further supported by asset sales and, if necessary, a degree of flexibility to defer growth capital expenditures.

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Executive Summary

• We are initiating coverage on Telecom with a Market Perform recommendation. We view the notes as fairly valued considering the uncertainty surrounding the potential acquisition of Telefónica. The transaction introduces near-term financial, regulatory, and operational risks, for which the company has not provided details, reflecting the complexity and scale of the deal. Additionally, the Milei administration continues to manage a complex policy mix that includes capital controls, inflation stabilization, and reserve accumulation ahead of the October 2025 mid-term elections. This contributes to elevated political and macroeconomic risk, which further compounds Telecom’s significant currency exposure. That said, improving macro indicators such as falling inflation, declining interest rates, and a stronger reserve position suggest a more supportive backdrop for investment and growth. We think this could help drive a recovery in ARPUs in USD terms and support Telecom’s network expansion plans. We believe Telecom is well-positioned to benefit from these trends but see a better entry point once there is greater clarity on the acquisition’s implications.

  • TECOAR’s 9.500% 2031 bonds, yielding 8.6% for a 4.0-year duration, compare modestly favorably to the broader EM B Index, which yields 8.5% for a 5.0-year duration, and reasonably better than the US B Index, yielding 7.8% for a 3.3-year duration. Current yields also compare well to some regional peers, including VISTAA (Caa1/BB-) 7.625% 2035 notes yielding 7.9% for a 6.1-year duration, TIGO (Ba3/BB+) 7.375% 2032 notes yielding 6.9% for a 4.0-year duration, and CWCLN (Ba3/BB-/BB-) 7.125% 2032 notes yielding 7.7% for a 5.0-year duration.

• Telecom maintains a strong market position, supported by its broad service scale and integrated offerings, which enhance customer retention and operational efficiency. The repeal of Decree No. 690/20 has improved pricing flexibility, though regulatory pressures and competitive dynamics remain key challenges. Nationwide coverage contributes to revenue stability, but profitability continues to be constrained by high inflation and currency devaluation. Ongoing investment in fiber and 5G infrastructure, along with effective macro risk management, will be critical to preserving Telecom’s market leadership.

• On February 24, 2025, Telecom Argentina announced the US$1.245 billion acquisition of 99.9% of Telefónica Móviles Argentina, aiming to strengthen its position as an integrated telecom provider. The deal was financed through a mix of debt assumption and loans totaling US$1.17 billion and could significantly expand Telecom's reach across mobile, broadband, and video services. Complete disclosures remain pending. However, on March 21, 2025, the government suspended the transaction due to antitrust concerns raised by the CNDC, which cited risks of excessive market concentration. Telecom has proposed remedies, including expanded MVNO access and infrastructure sharing, but regulatory uncertainty remains high.

• Telecom Argentina reported mixed 4Q24 results. Consolidated revenue declined 0.5% QoQ in real terms, though it increased 1.3% YoY, falling short of market expectations by 1.5%. The sequential decline was driven by inflation outpacing price adjustments. Reported EBITDA fell 4.1% QoQ but rose 2.8% YoY, missing consensus by 17.7%. The EBITDA margin narrowed 1.0 pp QoQ to 26.2%, as operating costs increased 0.9% QoQ despite softer top-line performance.

• From a credit perspective, the results reflected a 9.7% sequential increase in net debt (in USD: +3.1%) to P$2,739 billion (US$2.66 billion) as of December 2024, while LTM EBITDA reported in US Dollars rose 2.3% to US$1.13 billion. As a result, net leverage increased modestly to 2.4x from 2.3x in September 2024. The company’s liquidity remains weak, with short-term debt representing 3.3x its cash position and accounting for 37.1% of total debt. We note that the company lacks committed revolving credit facilities.

• Telecom has maintained solid market access, raising funds through both local and international markets. The company issued US$110 million in dollar-linked notes and US$75 million in local currency, while also placing US$817 million in international bonds between July and October at yields ranging from 8.75% to 9.7%. These actions extended the average maturity of its debt to 2.8 years as of December 2024, up from 2.5 years a year earlier. In January 2025, Telecom repaid US$160 million in Class 8 notes.

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Executive Summary

• We are initiating coverage on Suzano with a Market Perform recommendation. We view Suzano’s notes as fairly valued relative to peers following recent spread tightening. Additionally,…

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Executive Summary

• We are initiating coverage on YPF with an Outperform recommendation. In our view, improving macroeconomic conditions in Argentina will likely support YPF’s operations. This, combined…

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Executive Summary

• We are initiating coverage on PEMEX with an Outperform recommendation.  We believe that the possibility of PEMEX being reclassified as a 'public company' from a 'state productive ent…

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Executive Summary

• We are initiating coverage on Minerva with an Underperform recommendation. We expect the company to encounter challenges in free cash flow generation and credit metrics deterioration…

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Executive Summary

• We are initiating coverage on MercadoLibre with a preference for MELI 2.375% 2026 bonds.  We are optimistic about MELI’s overall financial and business risks.

  • For EM investors, we pre…

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