We maintain Neutral on Telecom Argentina (B2/B/B-) following its acceptance of Metrotel’s US$450 million offer for the customers and assets it must divest under the remedies imposed on its acquisition of Telefónica Móviles Argentina (TMA). The agreement is moderately credit positive. It removes a significant regulatory obstacle and brings Telecom closer to integrating the two businesses. However, the US$450 million is not equivalent to asset-sale proceeds. It includes guaranteed infrastructure-service payments over five years, with no disclosed breakdown between the two components. The immediate benefit to liquidity and leverage is therefore uncertain. At the bond level, we move the TECOAR 8.500% 2036s to Neutral from Overweight and maintain Neutral on the 2031s and 2033s. We now prefer the 9.250% 2033s.

Our August preference for the 2036s, outlined in Telecom Argentina 2Q26: Stronger Credit, Upside Gets Selective, was based on a roughly 50 bps OAS premium over the 2033s and more favorable call-price protection. That premium has narrowed to 24 bps, leaving insufficient compensation for 2.1 additional years of duration, particularly with Argentine sovereign risk still elevated. The 2033s offer a better trade-off. They provide 35 bps of additional Z-spread and 33 bps of yield over the 2031s for just 0.4 additional years of duration, while trading below their May 2028 call price. However, at 357 bps OAS, they are already 27 bps inside their one-year average and offer less than their one-year average premium over EM BB. We prefer the 2033s within the curve, but do not see enough value to upgrade them from Neutral.

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We maintain our Opportunistic Overweight recommendation on CSN, with lower conviction, and shift our preferred bond to the CSN Inova 11.000% 2030s from the CSN Resources 8.875% 2030s. The guidance cut does not create CSN’s liquidity problem. It weakens the principal operating buffer that was giving the company time to solve it. The reduction in 2026 production guidance and increase in C1 cash-cost guidance at CSN Mineração (CMIN) are credit negative. They make the thesis more dependent on the cement sale, working-capital release and continued refinancing access. The curve, however, has repriced by more than our fundamental view has changed. The Resources 2030s have widened 310 bps since our August report to 1,729 bps OAS. The Inova 2030s now trade at $71.3, 1,910 bps OAS and a 22.7% YTW. On a simple coupon-carry basis, they break even over 12 months at roughly $60.3. Default remains outside our base case over a 9 to 12 month horizon, and we think current levels compensate for the higher execution risk.

The bond switch reflects a material change in relative value since August. The Inova 2030 notes now offer 181 bps of additional OAS and 160 bps of additional YTW over the Resources 2030s, with 0.2 years less duration, and their dollar-price premium has narrowed to 3.1 points from 6.3 points when we last reviewed the curve on August 19. For investors assigning greater weight to an impairment scenario, the long end remains the defensive expression, and we prefer the CSN Resources 5.875% 2032s to the 4.625% 2031s. We continue to avoid the residual CSN Inova 6.750% 2028s.

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We move our recommendation on Braskem to Underweight from Neutral and shift our preferred expression across the senior unsecured curve to the BRKME 5.875% 2050s from the BRKME 8.500% 2031s. The downgrade is primarily a valuation call. Creditors are reportedly resisting Braskem’s latest proposal, talks have become more contentious again after the parties agreed to pursue the extrajudicial restructuring route, and recuperação judicial has returned more prominently to the discussions. At the same time, the reported terms give bondholders the first concrete indication of how Braskem may attempt to reduce debt rather than only extend maturities and capitalize interest. Yet the 2028-2041 senior curve is down only about 2.5 points on a face-weighted basis since our August 2Q26 report despite the more creditor-punitive restructuring framework, while the 2050s have fallen 5.6 points. The 2028s through 2041s currently trade between $51.4 and $58.2, with a face-weighted average of approximately $54.7, versus $43.3 for the 2050s. We rate the 2028s through 2041s Underweight and the 2050s Neutral. We prefer the 2050s because the lower dollar price provides more protection if restructuring treatment converges, while recognizing that the advantage can reverse if bond-specific coupons and maturities are preserved.

Braskem’s latest proposal reportedly asks creditors to provide approximately US$2.0bn of new money. About US$1.25bn would fund a repurchase of existing debt at up to 50% of face value, while US$750mn would fund working capital. The proposal at least addresses principal reduction, unlike Braskem’s original framework. The economics, however, still appear insufficient to create a durable balance-sheet solution if the new money is itself debt, reinforcing our view that Braskem ultimately requires both substantive creditor concessions and fresh shareholder capital. A group of bondholders is now reportedly asking Petrobras and IG4 to contribute approximately US$3.0bn of fresh equity, while multiple bondholders have indicated that they do not intend to provide additional funding themselves. We see the demand as further evidence that the current proposal remains far from consensual. It does not mean US$3.0bn of shareholder capital is likely to be provided.

The downgrade does not depend on the precise reported proposal terms. In August, the absence of a large collateralized layer ahead of the bonds was one of the main reasons we remained Neutral. That protection is now less secure. Negotiations contemplate creditor-funded new money, while proposals under consideration have included security interests over assets. Prices across most of the curve still provide limited recovery cushion, while the 2050s offer more price protection but remain exposed to the same unresolved restructuring risks.

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We maintain our Overweight recommendation on Pemex, with lower conviction, and change our preferred expression for new money to the 7.690% 2050s. We retain the 6.625% 2035s as the core lower-duration position for accounts that do not want long-end volatility. For accounts with duration flexibility, we would rotate front-end positions into the 2035s or 2050s; we would retain the front end only for short-duration mandates prioritizing downside protection. We view Mexico’s proposed 2027 budget as neutral to modestly positive for the credit. The P$81.1 billion transfer allocated to Pemex debt service is approximately 69% below the P$263.5 billion budgeted for 2026, but we do not interpret the reduction as a withdrawal of sovereign support. It primarily reflects the decline in near-term refinancing needs produced by Mexico’s liability-management strategy rather than an improvement in Pemex’s standalone cash generation. Explicit support remains in the budget, while the 2027 financing framework preserves substantial domestic and external borrowing authorization.

The more consequential change for bondholders since our 2Q26 report is where the refinancing improvement is now reflected in the curve. The front end has tightened sharply, while intermediate and long-dated bonds have widened. The 5.350% 2028s are 34 bps tighter at 75 bps OAS and the 8.750% June 2029s 22 bps tighter at 96 bps, while the 6.625% 2035s are 12 bps wider at 315 bps and the 7.690% 2050s 21 bps wider at 433 bps. The curve is now distinguishing more clearly between the refinancing risk sovereign action has reduced and the longer-term risks that remain, including dependence on support, weak standalone cash generation and operating execution.

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We maintain our Neutral recommendation on MercadoLibre (Baa3/BBB-/BBB-), unchanged from our 2Q26 report, and continue to prefer the MELI 3.125% 2031s. The new 5.850% 2036s improve liquidity and extend the debt profile, but at a 6.139% reoffer yield we do not think the bond offers enough compensation for approximately 7.5 years of duration and a funding-intensive balance sheet. The credit itself remains strong. MercadoLibre continues to deliver rapid operating growth, has demonstrated access to long-term funding and now has better coverage of short-term obligations. The constraint remains valuation relative to cash generation, leverage and the funding requirements of Fintech. The credit portfolio grew 75.2% YoY in 2Q26 against 49.8% consolidated revenue growth, while total debt increased 46.7%. Adjusted FCF was only US$214 million despite US$3.22 billion of free operating cash flow, while gross and net leverage stood at 3.39x and 1.65x. We therefore view the new 2036s as a Hold. The 2031s remain our preferred expression given their $90.3 price and 3.9-year duration, while for accounts seeking longer duration we prefer the new benchmark to the 2033s.

MercadoLibre priced US$1.0 billion of 5.850% senior unsecured notes due September 14, 2036 at $97.864 to yield 6.139%, with an issue spread of 130 bps. Pricing tightened approximately 30 bps from initial price talk around 160 bps, and the company said the transaction attracted more than 100 institutional investors. Settlement is scheduled for September 14. The notes are SEC registered, governed by New York law and guaranteed by six operating subsidiaries across Argentina, Brazil, Chile, Mexico and Colombia. They are callable at a T+20 make-whole spread before June 14, 2036 and at par thereafter. Proceeds are for general corporate purposes.

New Issue Terms

• Issuer: MercadoLibre, Inc.

• Instrument: Senior unsecured notes

• Size: US$1.0 billion

• Maturity: September 14, 2036

• Coupon: 5.850%, semiannual

• Issue Price: $97.864

• Reoffer Yield: 6.139%

• Issue Spread: 130 bps, from IPT around 160 bps

• Duration: approximately 7.5 years, EM Spreads estimate

• Expected Ratings: Baa3 / BBB- / BBB-

• Settlement: September 14, 2026

• Optional Redemption: Make-whole at T+20 before June 14, 2036; par thereafter

• Use of Proceeds: General corporate purposes; proceeds are expected to further strengthen liquidity

• Format: SEC Registered

• Governing Law: New York

• Expected Listing: Nasdaq Bond Exchange

• ISIN: US58733RAJ14

• Guarantors: MercadoLibre S.R.L., Mercado Livre Brasil Ltda., MercadoLibre Chile Ltda., DeRemate.com de México, MP Agregador and MercadoLibre Colombia Ltda.

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We maintain our Neutral recommendation on YPF (B1/B/B-) and shift our preferred expression to the new 7.550% June 2035 senior unsecured notes from the YPFDAR 9.500% 2031s. The increase in the tender cap makes the transaction more credit positive than at launch, as YPF can now fully retire the targeted 2027 bonds and meaningfully reduce the 2029s ahead of the presidential election in October 2027. YPF’s underlying credit trajectory remains positive. Valuation has also improved since our 2Q26 report. We continue to see the opportunity as concentrated in bond selection rather than broad enough across the curve to support a renewed issuer-level Overweight. At the bond level, we prefer the new 2035s, which now trade approximately 29 bps above YPF’s curve on a YTW basis. The 9.500% 2031s, meanwhile, no longer offer the spread pickup that made them our preferred instrument in our 2Q26 report. We retain the 8.250% 2034s as our preferred shorter-duration alternative and continue to avoid the 7.000% 2033s and 7.000% 2047s.

YPF priced US$1.2 billion of 7.550% June 2035 senior unsecured notes at a 7.85% yield and $98.075 issue price, with settlement expected September 18, 2026. On pricing day, the company doubled the Maximum Purchase Price for its concurrent tender offers to US$1.0 billion from US$500 million, excluding accrued interest, while stating that no other tender terms had changed. The 6.950% 2027s therefore remain Acceptance Priority Level 1 at $101.75 and the 2.500%/9.000% Step Up Amortizing 2029s Priority Level 2 at $104.20, each per US$1,000 principal amount. If fully utilized and supported by sufficient participation, the enlarged cap could retire all US$643 million of the 2027s and approximately US$331 million of the 2029s, for combined principal retirement of roughly US$975 million. The tender expires September 16 and is expected to settle on or around September 18.

New Issue Terms

· Issuer: YPF S.A. (B1/B)

· Instrument: Senior unsecured notes, 144A / Reg S

· Size: US$1.2 billion

· Maturity: June 18, 2035, bullet, 8.75 years

· Coupon: 7.550%, semiannual, 30/360

· Yield: 7.85%, from IPT in the low 8% area

· Issue Price: $98.075

· Settlement: September 18, 2026

· Optional Redemption: Make-whole prior to December 18, 2030; callable at $103.775 from December 18, 2030, $101.8875 from December 18, 2031, and par from December 18, 2032

· Use of Proceeds: Fund the tender offers for the 6.950% 2027s and 2.500%/9.000% Step Up Amortizing 2029s, with remaining proceeds for general corporate purposes

· Bookrunners: BBVA, Itaú (B&D), J.P. Morgan, Santander. Joint bookrunner: Balanz

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We maintain a Neutral view on Braskem’s senior unsecured complex following the 60-day court stay and rating downgrades. The stay reduces near term enforcement risk, but it does not restore working capital access, solve the maturity wall, or define the final creditor package. This is now a restructuring trade, not a conventional yield trade. Within the curve, we prefer the BRASKM 8.500% 2031s as the best risk adjusted way to stay exposed.

The 2031s offer the best balance of coupon, amended maturity, potential PIK claim accretion and recent trading support. We view the bonds as the preferred curve expression for accounts that want exposure to a negotiated recuperação extrajudicial. The 2034s remain acceptable secondary belly exposure, but we prefer the 2031s because the shorter maturity provides better protection if the restructuring is implemented through a maturity extension rather than a common recovery instrument. The 2028s offer the highest screen yield, but that yield is less meaningful if the maturity is extended. The 2050s offer low dollar price optionality, but under the current proposal they remain very long dated, lower coupon paper. The long end becomes more interesting only if final terms collapse maturities into a common senior unsecured recovery package, which is not the current proposal.

The proposal is more supportive of the higher coupon belly than of the front end or the long end. Braskem is proposing a uniform amendment, not an exchange into a single common takeback instrument: a five-year extension, PIK option through December 2028 and a 200 bps coupon reduction, while preserving principal and unsecured status. That keeps each bond’s original coupon and maturity profile relevant. After the proposed coupon cut, the 2031s would still accrue at roughly 6.50%, versus 2.50% for the 2028s and 2030s and 3.875% for the 2050s. If coupons are PIKed, the higher coupon bonds build a larger accreted claim, while the five-year extension erodes the 2028s’ maturity advantage and leaves the 2050s as very long dated, lower coupon paper.

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We take a fresh look at Telecom Argentina (B2/B-/B-) following the June 18 antitrust ruling on its acquisition of Telefónica Móviles Argentina (TMA), and assign a Neutral recommendation to the issuer. Within the curve, we prefer the TECOAR 8.500% 2036 notes for investors who want to maintain exposure. The conditional approval cuts both ways. It removes the risk of outright rejection and gives Telecom a clearer path to integration, but the conditions are heavier than the market expected and reduce the scale benefits the acquisition was meant to deliver.

For bondholders, the question is no longer whether the deal can proceed, but how much value Telecom retains after divesting 6 million mobile customers, transferring spectrum, selling fixed internet subscribers in selected localities and giving a new competitor access to its network. On that question, we land at Neutral. The EBITDA tied to the required divestitures appears manageable relative to the group, leverage remains low, and the rating is still constrained more by the sovereign than by the business perimeter. That helps explain why the credit did not reprice the news as a material negative, even as the equity sold off about 12% from the eve of the ruling and roughly 20% from its early June high.

What the ruling does add is another layer of execution risk around EBITDA retention, integration timing, competitive pressure from a regulator enabled competitor and management’s capital allocation priorities. At current spreads, we do not think the bonds pay investors enough to add to that risk. Our Neutral call is therefore driven mainly by valuation. Telecom OAS compressed by roughly 50 bps in the weeks before the ruling and is now close to one year tights, leaving limited spread cushion for incremental risk after the remedy decision. We would not add the 2031s or 2033s at current levels. For investors who need exposure, we prefer the 2036s, but as a Hold rather than a Buy.

What happened

On June 18, 2026, Argentina’s antitrust tribunal, TDC, within the ANC, cleared Telecom’s acquisition of exclusive control of TMA, owner of the Movistar brand, subject to structural and behavioral remedies. Telecom acquired 100% of TMA for US$1.245bn, with the transaction finalized on February 24, 2025, but the deal had been under preventive suspension since March 2025. The regulator’s concern was concentration. Combined, Telecom, through Personal, with a 33.8% share, and Movistar, with a 24.4% share, would have held roughly 58% of the mobile market, compared with AMX, through Claro, at 42%. This would have created a duopoly in mobile and close to 70% concentration across total telecom services. The remedies are intended to bring the combined position back toward 50%.

The principal disclosed terms and reported implementation details include:

• Mobile divestiture of at least 6 million customers, including 4 million in AMBA and 2 million in the rest of the country, to an independent buyer. This represents roughly a third of TMA’s 19.2 million mobile accesses and about 9% of the national mobile market.

• Transfer of the radio spectrum usage rights needed for the divested mobile service to operate competitively. Press reports also indicate a broader spectrum remedy of 130 MHz, including 60 MHz returned immediately nationwide and the remainder routed to the secondary market.

• Network access for the new entrant, including RAN sharing, national and international roaming, and colocation, for a transition period reported at two to three years, until the new operator builds out its own network.

• Transfer of Movistar’s residential fixed internet base in 28 localities, totaling 211,400 subscribers, across CABA, Buenos Aires, Mendoza, Neuquén and Río Negro, plus behavioral remedies in the corporate and wholesale segments.

• A divestiture window of up to 18 months, supervised by an independent monitoring agent.

Telecom called the ruling excessive and said it is weighing its options as a listed company with financial implications, without ruling out any alternative. The company also reiterated its investment commitment, at roughly US$1.3bn this year and about US$9bn since 2018. The ruling resolves the binary risk but leaves Telecom with a choice: comply, negotiate, challenge the decision or seek modifications. Its initial response points away from quiet acceptance.

For bondholders, that creates a two way path. A legal or regulatory dispute would delay integration, while full compliance would lock in the loss of scale and EBITDA. Either way, the deal is no longer at risk of outright rejection, which is the part that mattered most for the credit.

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Cemex priced US$1.5 billion of 5.750% Senior Notes due June 5, 2036. The notes have a June 5, 2026 issue date, mature on June 5, 2036, and pay interest semiannually. They were priced at 99.572 to yield 5.807%, with an issue spread of 135 bps over the UST 4.375% due May 15, 2036. The notes are senior unsecured obligations guaranteed by Cemex Corp. and are rated BBB- by S&P and Fitch. They are callable at par on March 5, 2036. Cemex intends to use the proceeds for general corporate purposes, which may include the repayment of indebtedness and other financial obligations, including all or part of outstanding borrowings under certain credit agreements.

We maintain our Neutral issuer level view on Cemex and assign a Buy recommendation to the new 2036 notes. The issuer call reflects a restored investment grade profile that is already well reflected in spreads, while the bond call reflects what we view as the cleanest 10Y entry point on the Cemex curve. We view the Buy recommendation as driven by carry, benchmark liquidity and curve access, rather than by a clear new issue discount. The 2036s did not price with an obvious spread concession, but they offer a near par entry point, 5.8% YTW, full benchmark size and a more efficient longer dated expression than the existing 2029, 2030 and 2031 notes.

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Vista Energy announced an agreement to acquire Equinor’s onshore unconventional assets in Argentina’s Vaca Muerta basin, marking another step in the company’s strategy to consolidate scale in the core of the shale play. The transaction involves the acquisition of non-operating working interests in two producing blocks, Bandurria Sur and Bajo del Toro, both operated by YPF. Vista will acquire a 25.1% interest in Bandurria Sur and a 35.0% interest in Bajo del Toro, while YPF will remain operator of both assets. Following completion, YPF will hold a 44.9% interest in Bandurria Sur and a 65.0% interest in Bajo del Toro, with Shell Argentina retaining a 30.0% stake in Bandurria Sur. The acquisition is subject to customary conditions precedent, including regulatory approvals and the waiver or non-exercise of pre-emptive rights held by partners. YPF has already signed a waiver of its pre-emptive rights, subject to Shell Argentina’s decision regarding its own rights. Closing is expected in 2Q26.

The transaction value is framed differently by the parties. Equinor disclosed a headline value of approximately $1.1 billion, which includes upfront consideration, Vista equity, and contingent payments linked to production and oil prices over a five-year period. Vista, in turn, reported a transaction value of $712 million, which excludes contingent payments and the value of interests sold to YPF as part of the broader restructuring, thereby explaining most of the difference versus Equinor’s headline valuation.

• Upfront consideration consists of $387 million in cash.

• 6.2 million Vista ADSs, valued at US$52.2 per share based on a 20-day volume-weighted average price.

• A contingent consideration mechanism payable in five annual installments, calculated based on the acquired assets’ annual working interest production and the prior year’s average Brent price. No payment is due if Brent is at or below $65 per barrel, with payments capped at $15 per barrel at or above $80 per barrel.

To fund the transaction, Vista expects to use a combination of cash on hand and new bank financing. The company indicated that it has secured commitments for a new four-year loan facility of up to $600 million from a consortium of international banks, with the final amount to be determined at closing.

The assets are located in the core of Vaca Muerta and are adjacent to Vista’s existing operations, which management views as supportive of operational synergies and improved development efficiency. Upon closing, Vista expects to add approximately 22,000 boe/d of production, increasing total output by around 17% to roughly 150,000 boe/d. The transaction also adds an estimated 54 million boe of proved reserves and approximately 27,730 net acres in what Vista describes as the epicenter of the basin, together with a sizable inventory of ready-to-drill wells. Bandurria Sur is a mature unconventional concession awarded in 2015 with a 35-year term, while Bajo del Toro and Bajo del Toro Norte were awarded in 2021, also with 35-year terms.

According to company disclosures, the acquired assets generated $292 million of revenues over 9M25, of which $283 million were oil-related, implying a highly oil-weighted cash flow profile. On an annualized basis, revenues reach approximately $391 million, supporting adjusted EBITDA of $269 million. Cost metrics are competitive by Vaca Muerta standards, with lifting costs of $4.7/boe and selling expenses of $4.4/boe, underscoring the low-cost nature of the production base. Notably, approximately 64% of oil production is exported, reinforcing hard-currency cash generation and aligning the asset profile with Argentina’s broader export-driven shale strategy.

Recommendation and credit view

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Following our recent note on CSN’s announced divestment strategy, S&P Global Ratings downgraded the company to B+ with a Negative outlook, citing uncertainty around the execution, timing, and cash flow impact of the planned asset sales. While we agree that execution risk remains central to the credit story, we think the downgrade also highlights a broader tension between rating agency methodology and the directional improvement implied by a deleveraging plan of this magnitude.

S&P’s rationale is anchored in the conditional nature of CSN’s leverage reduction. The agency assumes that, absent completed divestments, leverage remains above 5.0x through 2026 and therefore treats the announced R$16–18bn asset sale program as largely neutral until proceeds are realized. From a methodological standpoint, this approach may be internally consistent, but it is inherently backward looking at a moment of strategic inflection. From a bondholder perspective, however, it arguably underweights the more relevant question, which is whether the plan improves the probability of deleveraging within a timeframe that matters for creditors, even if the path remains execution dependent.

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We maintain our initiation framework that asymmetric risk favors operating-company bonds over the holding company, even as 4Q25 preliminary results improve the group’s credit optics. The deleveraging to 3.1x and the completion of the Ciclus Rio sale are credit positive and reduce near-term downside risk, but they do not change the structural reality that SIMHBZ 2031 remains structurally subordinated and reliant on upstreaming after subsidiaries meet their own debt service and liquidity needs. That dependence on upstreaming and structurally path-dependent recoveries was a core reason we preferred Vamos over Simpar at initiation.

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On January 15, 2026, CSN hosted its Strategic Plan update call, during which it announced that its Board of Directors authorized a structured divestment plan aimed at reducing the group’s gross debt by R$15 billion to R$18 billion. The company intends to sell a controlling stake in its cement subsidiary, CSN Cimentos, and a relevant minority stake in its infrastructure division, CSN Infraestrutura. Management indicated that the sales process begins immediately, stating “we’re beginning this project today,” with the signing of definitive agreements expected between the third and fourth quarters of 2026.

Chairman Benjamin Steinbruch framed the decision as a response to Brazil’s high interest rate environment, describing rates as “stratospheric” and noting that the targeted deleveraging amount represents roughly 50% of the company’s current debt. Management emphasized that waiting for a more benign rate cycle would continue to weigh on cash flow and pressure the capital structure, reinforcing the need to pursue balance sheet action despite challenging market conditions for asset valuations.

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We maintain our view that Braskem’s large domestic footprint, political relevance, and partial government ownership make a default event less likely in the near term. That said, we think the timing of liquidity measures and clarity on policy relief will be decisive for any sustained re-pricing. At current spread levels, we view most of the downside as already reflected in prices, with Braskem bonds trading in the $36–44 range, improving from the $31–39 range in mid-October 2025. In this context, we favor exposure to the lower-priced bonds within the curve, where investors have better protection against potential haircuts.

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At current spread levels and with a steeper curve, we continue to recommend the PEMEX 6.700% 2032s, yielding 6.9% with a 4.4-year duration, as we see more value in the belly of the curve. For investors with higher duration appetite, we find the PEMEX 7.690% 2050s, yielding 8.6% with a 10.2-year duration, the most attractive on the long end, as they offer compelling carry and, at $90.9, provide further upside potential.

Mexico’s recent actions represent an extraordinary demonstration of support, effectively transferring Pemex’s refinancing burden onto the sovereign balance sheet. For credit markets, this justifies Pemex’s tighter 10Y spreads versus the sovereign and explains the sharp compression in the Pemex–Mexico spread. Since the July 22, 2025 announcement, Pemex’s 10Y spread has tightened by 136 bps to 355 bps, 80 bps below the 3-month average of 435 bps and 169 bps below the one-year average of 524 bps. As we have highlighted previously, spread compression in Pemex tends to follow tangible credit-positive measures, such as the government issuing debt to directly support the company.

That said, we believe further tightening will hinge on Pemex’s fundamentals, particularly improvements in oil production and cash generation. While government measures anchor near-term performance, investors are likely to increasingly focus on Pemex’s operational profile. We continue to see structural weaknesses, including declining upstream production and an unprofitable downstream segment, which significantly constrain cash generation and leave the company reliant on sovereign support. Pemex bonds should remain well-supported in the near term, but execution risks and fragile fundamentals cap medium-term upside.

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Market Snapshot

The LatAm Aggregate Index widened by 8 bps to 299 bps in the week ending Friday, September 12, 2025, and is now trading 8 bps below its 3-month average of 291 bps. The broader Emerging Market Index contracted 3 bps to 171 bps, 7 bps tighter than its 3-month average of 178 bps. Meanwhile, the U.S. Aggregate Index narrowed by 3 bps to 106 bps, 6 bps below its 1-year average of 112 bps.

Notably, the EM CCC Index widened by 117 bps to 898 bps and is now 200 bps above its 3-month average of 698 bps and 90 bps higher than its 1-year average of 808 bps. In contrast, the U.S. CCC Index contracted 11 bps to 624 bps, 25 bps tighter than its 3-month average of 649 bps. The EM CCC Index was primarily affected by the repricing of Argentine risk following the provincial elections.

Equity markets in the region posted mixed performance. Argentina’s Merval Index fell 19.6%, while Brazil’s Ibovespa increased 4.3% and Mexico’s Mexbol gained 6.2%. In the U.S., the S&P 500 Index rose 1.8% over the week.

In commodities, WTI crude closed at $62.7/b, down 2.0% on the week, while Brent settled at $67.0/b, up 0.2% over the same period.

Turning to bond yields, the 10-year U.S. Treasury yield contracted 22 bps to 4.06%, while the 5-year yield declined 18 bps to 3.63%. In Latin America, the 10-year Mexican government bond yield narrowed 26 bps to 5.61%, the Brazilian 10-year rose 18 bps to 6.11%, and Argentina’s 10-year jumped to 13.28% from 11.35%.

Weekly News

Argentina: Election Setback Highlights Elevated Political Risk

On September 7, 2025, President Javier Milei’s Libertad Avanza party suffered a heavy defeat in Buenos Aires provincial elections, losing to the Peronist opposition by nearly 14 points. The setback, coming a month ahead of congressional midterms, raised doubts about Milei’s political capacity to advance structural reforms. Axel Kicillof’s potential return to national politics also revives memories of his 2012 YPF expropriation, sovereign default, and currency controls. The loss underscores Milei’s weakened political capital heading into October’s midterms, where his ability to secure congressional support for fiscal and labor reforms will be tested. Investors are recalibrating expectations, with many viewing Kicillof’s rise as a signal that heightened political risk premia could persist.

We view Milei’s electoral defeat and the emergence of “Kicillof risk” as material headwinds for Argentine spreads in the near term, adding a premium to Argentine risk given heightened uncertainty around policy continuity, reform execution, and investor confidence. While the administration has delivered progress on disinflation and reserve accumulation, the political setback raises the risk of legislative gridlock and complicates Argentina’s ability to sustain reforms, particularly with $4 billion in maturities approaching in January 2026. The consolidation of Axel Kicillof’s leadership within Peronism further clouds the medium-term outlook, intensifying concerns about a potential populist resurgence in 2027.

As a result, markets reacted sharply on Monday. Argentina’s hard-currency bonds dropped up to 7 cents to around 55 cents on the dollar, pushing yields near 12.7% in the steepest decline in two years. The peso weakened to a new all-time low, sliding as much as 7% past ARS1,400 per USD, while the Merval equity index fell 13% in its worst single-day performance since 2020.

To access the full report, including our recommendations, click here.

Suzano Priced US$1bn 5.500% 2036 Unsecured Notes

On September 3, 2025, Suzano Netherlands B.V., guaranteed by Suzano S.A., priced US$1 billion senior unsecured notes due January 2036 at 98.714 to yield 5.667%, equivalent to T+145bps. This came tighter than the +150bps guidance and well inside the +180bps initial price talk. The coupon was set at 5.500%, with semiannual payments beginning January 15, 2026. The bonds are rated Baa3/BBB-/BBB-.

The notes are governed by New York law and feature a make-whole call at T+25bps plus accrued and unpaid interest until October 15, 2035, after which a par call applies. They also include an 85% clean-up call provision. Gross proceeds totaled US$987.1 million (before fees and expenses). Proceeds will be used to repurchase Suzano’s 2026 and 2027 notes pursuant to ongoing tender offers, followed by potential make-whole redemptions, subject to market conditions.

We think the transaction reinforces Suzano’s proactive liability management and supports its credit trajectory. Pricing well inside IPT highlights strong demand for Suzano paper and favorable market access, consistent with the issuer’s solid position within the LatAm BBB peer group. The new 2036s extend the maturity profile and facilitate refinancing of nearer-term debt without increasing overall leverage. We note that while Suzano has pursued strategic M&A recently, including the Kimberly-Clark tissue assets, management remains committed to deleveraging, which should help contain balance sheet risks.

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Pemex: Bond Buyback Offer Highlights Sovereign Support and Debt Relief

On September 2, 2025, Pemex announced the launch of a buyback offer of up to US$9.9 billion across 11 bonds. The program targets front-end maturities, specifically USD-denominated bonds due 2026–2029 and EUR-denominated bonds due 2026–2028. A priority framework will govern acceptance of tenders, beginning with the 4.500% 2026s, followed by the EUR 3.750% 2026s and the USD 6.875% 2026s. The offer includes an Early Tender Premium of 30 per 1,000, with withdrawal and early tender deadlines set for September 15 and final expiration on September 30.

Pemex may exercise an Early Settlement Right after the Early Tender Date, subject to conditions. Consideration will be paid in cash plus accrued interest, with proration applied if tenders exceed the cap. The buyback follows Mexico’s recently announced sovereign-backed financing to support Pemex, including the July–August issuance of pre-capitalized securities and related treasury-collateralized funding, which authorities have signaled will help cover 2025–2026 maturities.

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YPF Advances LNG Push with New Partners Sought for $25bn Projects

YPF is in talks to add one or two new partners to its LNG ventures with Shell and Eni, CEO Horacio Marín confirmed at the Gastech conference in Milan. The projects, with an estimated cost of $25bn, aim to monetize Vaca Muerta shale gas with exports to Europe and Asia. YPF expects to complete technical studies by year-end, with Wison Group conducting engineering for Eni’s portion, and to secure financing starting in 2026. The company could hold a 25–30% equity stake, with the remainder funded through partners and a typical 70/30 debt–equity structure. First production is targeted for 2029–2030.

The LNG plan builds on YPF’s accelerated pivot to unconventional resources. The company has already divested 18 conventional blocks under its Mature Fields Exit Program, with two-thirds of its US$5bn 2025 capex directed toward shale. LNG exports would be a structural shift, moving Argentina from net importer to niche exporter, complementing recent upstream and midstream expansion.

MercadoLibre Fintech Momentum, CEO Transition, and New Growth Pilots

MercadoLibre CEO Marcos Galperin said at an event in Mexico City that Mercado Pago, the company’s fintech arm, is expanding faster than its core e-commerce business. Mexico country head David Geisen added that the local market is projected to grow 10% through year-end. Ariel Szarfsztejn, President of Commerce and incoming CEO from January, highlighted that AI developments are expected to reshape user interaction with the company’s platforms in as little as 2–3 years. Galperin stated he is handing over leadership at the “best moment” for the company as he moves into the chairman role.

Separately, CFO Martin de los Santos confirmed that MercadoLibre is testing pilot programs in pharma and food delivery. He said pharma is attractive given the high frequency of purchases despite its regulatory complexity, while food delivery could enhance ecosystem stickiness. These initiatives follow the company’s acquisition of a pharmacy in Brazil earlier this year, as reported locally.

Moody’s Upgrades Pemex to B1, Stable Outlook

On September 8, 2025, Moody’s Ratings upgraded Pemex’s Corporate Family Rating and senior unsecured ratings to B1 from B3, while affirming its Baseline Credit Assessment (BCA) at ca. The outlook was revised to Stable from “under review for upgrade.” Moody’s cited the Mexican government’s stronger commitment to supporting Pemex through its Strategic Plan 2025–2035, which includes equity-like contributions via the $12 billion P-CAP structure, an Investment Fund for upstream capex and suppliers, and a $9.9 billion debt tender backed by sovereign issuance.

Despite the uplift, Moody’s noted that Pemex continues to face structural challenges, including negative free cash flow, declining production, weak refining economics, and large cash requirements estimated at $7 billion annually in 2026–27. Liquidity remains thin, with $5.1 billion in cash and limited revolver capacity against heavy short-term obligations. The B1 rating reflects six notches of uplift from government support, assuming Very High default correlation and Very High probability of state backing, while the company’s standalone credit remains distressed.

Mexico – S&P Affirms ‘BBB’/‘BBB+’, Stable Outlook On Policy Prudence And Solid External Position

On September 8, 2025, S&P affirmed Mexico’s long-term foreign currency rating at BBB and local currency at BBB+ with a stable outlook, citing prudent monetary policy, moderate fiscal deficits ahead, and a solid external position; short-term ratings remain A-2 and the T&C assessment at A. The committee expects pragmatic management of U.S.–Mexico disputes and views sovereign support for Pemex and CFE as “almost certain,” keeping both aligned with the sovereign despite weaker standalone profiles. S&P projects net general government debt around 50% of GDP and interest near 15% of revenues in 2025, with the deficit narrowing toward 4% of GDP as fiscal consolidation resumes.

The decision lands alongside Banxico’s 25 bp cut in August to 7.75%, which supports a measured easing cycle as inflation moderates. S&P’s rationale underscores Mexico’s access to deep local markets, with most debt fixed-rate and long-tenor, and notes policy uncertainties from institutional reforms and contingent liabilities at state-owned energy firms. The reaffirmation follows fresh sovereign-backed support channels for Pemex, including the $12 billion P-CAP structure, reinforcing the agency’s view of extraordinary support.

EM Spreads - Weekly News Sep 12

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See Also:

• Argentina (September 11, 2025): Argentina: Election Setback Highlights Elevated Political Risk

• Suzano (September 8, 2025): Suzano Priced US$1bn 5.500% 2036 Unsecured Notes

• Pemex (September 3, 2025): Pemex: Bond Buyback Offer Highlights Sovereign Support and Debt Relief

• Telecom (August 21, 2025): Telecom 2Q25: Neutral Amid Uncertainties While Upside Remains Limited

• Suzano (August 19, 2025): Suzano 2Q25: Credit Resilient but Curve Positioning Shift

• YPF (August 15, 2025: YPF 2Q25: Encouraging Strategic Progress Supports Overweight View

• Minerva (August 12, 2025): Minerva 2Q25: Strong Results and Deleveraging Support Overweight Call

• Mercado Libre (August 10, 2025): MELI 2Q25: Constructive on Growth Prospects, Limited Spread Compression

• CSN (August 6, 2025): CSN 2Q25: Stable Credit Metrics and Attractive Carry Support Overweight

• Gerdau (August 4, 2025): Gerdau 2Q25: Credit Resilience Supported by US Exposure

• Pemex (July 31, 2025): Pemex 2Q25: Strong Government Backing Anchors Credit

• Cemex (July 28, 2025): Cemex 2Q25: Resilient Credit Navigates Soft Results, but Tight Spreads Limit Upside

• Market Commentary (July 16, 2025): U.S. Tariff Escalation: Credit Implications for Brazilian Companies in Our Coverage

• Vista (July 14, 2025): Vista 2Q25: Results Reinforce Overweight, But Cash Burn and Liquidity Weaken Buffer

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On September 7, 2025, President Javier Milei’s Libertad Avanza party suffered a heavy defeat in Buenos Aires provincial elections, losing to the Peronist opposition by nearly 14 points. The setback, coming a month ahead of congressional midterms, raised doubts about Milei’s political capacity to advance structural reforms. Axel Kicillof’s potential return to national politics also revives memories of his 2012 YPF expropriation, sovereign default, and currency controls. The loss underscores Milei’s weakened political capital heading into October’s midterms, where his ability to secure congressional support for fiscal and labor reforms will be tested. Investors are recalibrating expectations, with many viewing Kicillof’s rise as a signal that heightened political risk premia could persist.

Morgan Stanley reversed its recent Overweight recommendation, moving to Neutral and citing elevated political risk following the defeat and a corruption scandal involving Milei’s sister. JPMorgan and Bank of America, however, reiterated their Overweight stance, arguing that Milei could recalibrate his political strategy and preserve reform momentum. Goldman Sachs noted that Argentina remains an institutional overweight among hedge funds, despite some trimming of exposure.

As a result, markets reacted sharply on Monday. Argentina’s hard-currency bonds dropped up to 7 cents to around 55 cents on the dollar, pushing yields near 12.7% in the steepest decline in two years. The peso weakened to a new all-time low, sliding as much as 7% past ARS1,400 per USD, while the Merval equity index fell 13% in its worst single-day performance since 2020.

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On September 2, 2025, Pemex announced the launch of a buyback offer of up to US$9.9 billion across 11 bonds. The program targets front-end maturities, specifically USD-denominated bonds due 2026–2029 and EUR-denominated bonds due 2026–2028. A priority framework will govern acceptance of tenders, beginning with the 4.500% 2026s, followed by the EUR 3.750% 2026s and the USD 6.875% 2026s. The offer includes an Early Tender Premium of 30 per 1,000, with withdrawal and early tender deadlines set for September 15 and final expiration on September 30.

Pemex may exercise an Early Settlement Right after the Early Tender Date, subject to conditions. Consideration will be paid in cash plus accrued interest, with proration applied if tenders exceed the cap. The buyback follows Mexico’s recently announced sovereign-backed financing to support Pemex, including the July–August issuance of pre-capitalized securities and related treasury-collateralized funding, which authorities have signaled will help cover 2025–2026 maturities.

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Market Snapshot

The LatAm Aggregate Index widened by 8 bps to 280 bps in the week ending Friday, August 22, 2025, and is now trading 15 bps below its 3-month average of 295 bps. The broader Emerging Market Index expanded 3 bps to 170 bps, reflecting a 13 bps contraction from its 3-month average of 182 bps. Meanwhile, the U.S. Aggregate Index increased by 1 bps to 108 bps, 7 bps below its 3-month average of 116 bps. Notably, the EM CCC Index widened by 40 bps to 686 bps and is now 8 bps below its 3-month average of 677 bps, while the U.S. CCC Index contracted 2 bps to 642 bps, 27 bps tighter than its 3-month average of 669 bps.

Equity markets in the region posted mixed performance. Argentina’s Merval Index fell 3.8%, while Brazil’s Ibovespa increased 1.2% and Mexico’s Mexbol improved 1.6%. In the U.S., the S&P 500 Index gained 0.3% on the week.

In commodities, WTI crude closed at $63.7/b, up 1.4% on the week, while Brent settled at $67.7/b, up 2.9% over the same period.

Turning to bond yields, the 10-year U.S. Treasury yield contracted 6 bps to 4.25%, while the 5-year yield declined 8 bps to 3.76%. In Latin America, the 10-year Mexican government bond yield increased 2 bps to 5.90%, the Brazilian 10-year rose 6 bps to 6.40%, and Argentina’s 10-year jumped 25 bps to 11.66%.

EM Spreads - Weekly News & Views with 2Q25 Earnings Recap

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2Q25 Earnings Recap

Telecom 2Q25: Neutral Amid Uncertainties While Upside Remains Limited

On August 21, we published our report on Telecom 2Q25 results.

We maintain our Neutral recommendation on Telecom Argentina (B2/B-/B). The notes offer attractive yields, and we think Telecom’s strategy is well positioned to leverage its strong market presence, with leverage metrics appearing solid and expected to improve further as the Telefónica integration progresses. However, we think a better entry point may emerge once there is greater clarity on regulatory, acquisition, and political fronts, while the 2031 and 2033 notes trade above par at $105.9 and $104.6, respectively, limiting near-term upside.

Telecom Argentina reported below expectations 2Q25 results. Consolidated revenue increased 32.3% QoQ and 61.0% YoY to P$1,912 billion, modestly missing market expectations by 0.3%. The top-line performance was supported by higher ARPU across all business lines and the consolidation of Telefónica Móviles Argentina (TMA), which provided a meaningful boost to reported figures. Reported EBITDA reached P$528 billion in 2Q25, up 10.2% QoQ and 41.0% YoY, but came in 5.0% below consensus expectations. The EBITDA margin contracted 5.5 pp QoQ to 27.6% and 3.9 pp YoY. EBITDA growth reflected stronger revenues, though margins compressed as certain costs grew faster than revenues, particularly severance charges at TMA, as well as bad debt expenses, regulatory taxes and fees, commissions and advertising, and other operating expenses. Management highlighted that excluding TMA severance charges, the theoretical margin would have been around 31.6%.

Suzano 2Q25: Credit Resilient but Curve Positioning Shift

On August 19, we published our report on Suzano 2Q25 results.

We downgrade Suzano’s (Baa3/BBB-/BBB-) 2031s and 2032s to Neutral and upgrade the 2029s to Overweight, as these notes offer a comparable yield while meaningfully reducing duration risk. We continue to view Suzano’s business and financial risks positively, supported by expectations of healthier pulp prices, higher sales volumes, and lower costs with reduced reliance on third-party purchases. However, at current spread levels, we see limited further upside for the 2031 and 2032 bonds. Management’s focus on deleveraging, cost efficiency, and executing strategic initiatives should further reinforce the company’s credit profile.

Suzano delivered healthy results, with stronger volumes and positive net free cash flow, though limited by lower prices. The company reported revenues of R$13.30 billion, up 15.1% QoQ and 15.7% YoY, exceeding market expectations by 3.8%. Sequential revenue growth was primarily driven by a 21.0% increase in sales volumes to 3,680kt in 2Q25, supported by higher Pulp (up 23.3%) and Paper (up 5.4%) volumes. This was partially offset by a 4.9% decline in average prices to R$3,613/t, with Pulp down 3.1% and Paper down 3.0%. Compared to 2Q24, revenue growth was underpinned by a 27.9% increase in sales volumes, reflecting a 28.4% rise in Pulp and a 23.5% increase in Paper. The top line was also supported by the 8.6% appreciation of the USD against the BRL and the start-up of Suzano Packaging US operations, partially offset by a 13.3% decline in Pulp prices (USD: down 20.1%).

YPF 2Q25: Encouraging Strategic Progress Supports Overweight View

On August 15, we published our report on YPF 2Q25 results.

We maintain an Overweight view on YPF (B2/B-/CCC+), supported by mature field divestments, lower lifting costs, and a strategic focus on expanding unconventional production and midstream/export infrastructure. These initiatives, along with a more favorable macroeconomic backdrop, should strengthen the credit profile and support bond outperformance. Risks include the October 2025 midterm elections and the unresolved Petersen/Eton Park legal dispute. We favor the YPFDAR 9.500% 2031 notes (8.1% yield, 2.7-year duration) and the 9.000% 2029 notes (7.7% yield, 2.0-year duration) for their attractive yields and limited duration risk.

YPF reported weak operating results in 2Q25, though in line with expectations. Total production volumes declined 1.2% QoQ, primarily due to the continued divestment of mature fields, where hydrocarbon production fell 26% sequentially to 72 kboed, representing only 13% of total production in the quarter. Revenues increased 0.7% QoQ to $4.64 billion, exceeding market consensus by 8.5%, supported by strong seasonal sales of natural gas and fuels, as well as higher crude oil and agricultural exports. These gains were partly offset by lower seasonal gasoline demand and Brent-driven declines in refined product prices, particularly for local fuels. Despite the sequential revenue increase, adjusted EBITDA declined 9.7% QoQ to $1.12 billion in 2Q25, though it exceeded market consensus expectations by 1.1%. The adjusted EBITDA margin contracted 2.8 pp QoQ and 0.2 pp YoY to 24.2%. The sequential decline was mainly driven by Brent contraction impacting refined product prices, the exit from mature fields, and inventory valuation effects, partially offset by lower lifting costs from reduced exposure to mature fields. Upstream EBITDA improved 0.7% QoQ, while Downstream EBITDA decreased 13.1% QoQ. We note that excluding mature fields, 2Q25 adjusted EBITDA would have been $1.25 billion, representing an 11.3% increase compared to the reported figure including mature fields.

Minerva 2Q25: Strong Results and Deleveraging Support Overweight Call

On August 12, we published our report on Minerva 2Q25 results.

We maintain an Overweight on Minerva’s 2033 bonds, which offer a 6.7% yield for a 4.0-year duration, providing higher yield with less duration risk than the 2031 notes and fair relative value to benchmarks and comparable notes. The view is supported by favorable beef market conditions, the company’s ability to offset U.S. tariffs, its track record of deleveraging, and successful asset integration, which we expect will drive further spread compression over the next 9–12 months.

Minerva reported solid operating results in 2Q25, generating net revenues of R$13.20 billion, up 24.3% QoQ and 81.6% YoY, exceeding market expectations by 11.0%. Growth was driven by higher sales volumes and prices in both domestic and export markets, including R$3.01 billion in revenue and 119.1k tons in volumes from newly acquired assets. Average prices increased 0.8% QoQ and 28.9% YoY to R$29.0/kg, while total volumes rose 22.3% QoQ and 39.8% YoY to 507k tons. Adjusted EBITDA increased 35.3% QoQ and 74.9% YoY to R$1.30 billion, exceeding consensus expectations by 14.8%. The adjusted EBITDA margin expanded 76 bps sequentially to 9.4% but contracted 35 bps YoY. Sequential margin expansion was mainly driven by cost dilution from higher volumes and revenues as the new assets ramped up, along with a 225 bps reduction in operating expenses as a percentage of revenue to 10.1%. The YoY contraction reflected higher cattle prices in several regions, which outpaced the increase in average selling prices. Management expects further cost dilution and margin support through year-end as utilization rates at the new plants improve.

MELI 2Q25: Constructive on Growth Prospects, Limited Spread Compression

On August 10, we published our report on Mercado Libre 2Q25 results.

We maintain our Neutral recommendation on MELI’s 2031 bonds, as relative value comparisons place them close to fair value, albeit on the expensive side. While we remain constructive on MELI’s operating profile and growth prospects, we see limited potential for further spread compression over the next 9–12 months given persistent margin pressure from new marketing and shipping initiatives, higher debt, and a tighter liquidity profile.

MercadoLibre delivered strong topline growth in 2Q25, although EBITDA missed market expectations. Revenues increased 14.4% QoQ and 33.8% YoY (FX-neutral: up 53% YoY) to $6.79 billion, supported by a 14.5% QoQ and 20.6% YoY increase in gross merchandise volume (FX-neutral: up 37.2% YoY) and a 10.8% QoQ and 39.4% YoY increase in total payment volume (FX-neutral: up 60.9% YoY). Healthy growth across key markets drove revenues 3.1% above consensus, with Brazil up 12.7% QoQ and 24.7% YoY, Mexico up 23.2% QoQ and 25.4% YoY, and Argentina up 10.5% QoQ and 76.9% YoY. By segment, Commerce revenues grew 16.2% QoQ and 29.3% YoY to $3.84 billion, while Fintech revenues increased 12.1% QoQ and 40.3% YoY to $2.95 billion.

CSN 2Q25: Stable Credit Metrics and Attractive Carry Support Overweight

On August 6, we published our report on CSN 2Q25 results.

We maintain our Overweight recommendation, favoring the CSNBZ 4.625% 2031s (yielding 9.1%, priced at $80.0) and CSNBZ 5.875% 2032s (yielding 9.3%, priced at $83.3) for their attractive carry, potential price upside, and wide spreads versus the LatAm BB curve. We believe CSN’s credit metrics will remain broadly stable, while spread compression could be supported by Brazilian protectionist measures on steel imports, a possible recovery in steel prices from Chinese production cuts, asset sales, anticipated domestic rate cuts, and improving global trade sentiment.

CSN delivered positive 2Q25 operating results despite headwinds. The company reported consolidated revenues of R$10.69 billion, down 2.0% QoQ and 1.7% YoY, coming in 2.0% below market expectations. The sequential decline was primarily driven by lower iron ore prices, which offset operational improvements, while steel revenues were affected by CSN’s decision to prioritize margin over volume amid a surge in low-priced imports. Adjusted EBITDA totaled R$2.64 billion, up 5.3% QoQ but down 0.1% YoY, exceeding consensus expectations by 6.4%. The adjusted EBITDA margin expanded 1.7 pp QoQ and 0.4 pp YoY to 24.7%. In the steel segment, the EBITDA margin increased 2.8 pp QoQ and 5.0 pp YoY to 10.8%, despite lower steel sales and revenues, as the company targeted the domestic market with more resilient pricing and lower costs, offsetting the 11.4% QoQ and 9.7% YoY decline in shipments caused by import competition. In the mining segment, EBITDA was pressured by lower prices, higher sea freight costs, and increased third-party purchases, while improved iron ore production contributed to cost dilution, helping to reduce C1 costs.

Gerdau 2Q25: Credit Resilience Supported by US Exposure

On August 4, we published our report on Gerdau 2Q25 results.

We maintain our Neutral recommendation on Gerdau. While we continue to hold 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 5.6% and 6.0%, respectively, and trading wide to the US BBB curve. For US investors, this presents a noteworthy yield pickup opportunity within the investment-grade space.

Gerdau’s 2Q25 results were once again driven by North America, while performance in Brazil remained under pressure. The company reported revenues of R$17.53 billion, up 0.9% QoQ and 5.5% YoY, broadly in line with consensus, exceeding expectations by 0.3%. The sequential improvement was supported by stronger performance in North America, where higher shipments and price adjustments offset weaker trends in Brazil and South America. On a YoY basis, revenue growth was driven by an 8.6% USD appreciation and a 4.1% increase in consolidated shipments, primarily from volume growth in North and South America. This helped mitigate ongoing pricing and import-related pressures in Brazil.

Pemex 2Q25: Strong Government Backing Anchors Credit

On July 31, we published our report on Pemex 2Q25 results.

We recommend a selective Overweight on Pemex’s curve, supported by strong government backing evidenced by the $12 billion issuance and openness to private-sector funding, which effectively improves liquidity, reduces interest expense, and diversifies funding sources.

Pemex reported mixed 2Q25 results. The company’s top line increased 3.8% QoQ but declined 15.6% YoY to $20.09 billion. The sequential improvement was primarily driven by an 11.2% increase in domestic revenues, while the YoY decline was marked by a 24.8% drop in export revenues. Pemex generated $3.90 billion in adjusted EBITDA, down 51.7% QoQ but up 22.3% YoY. The adjusted EBITDA margin contracted 12.0 pp QoQ but expanded 5.5 pp YoY to 19.4%. The sequential deterioration was mainly due to a 25.0% increase in cost of sales and an 18.6% rise in operating expenses. On a YoY basis, the margin expansion was supported by a 19.2% decrease in cost of sales, partially offset by a 12.1% increase in operating expenses. After seven consecutive quarters of sequential production declines, Pemex’s oil and condensate production averaged 1,621 kbpd in 2Q25 (excluding partners), up 1.6% QoQ but down 8.2% YoY. Including partners, total production reached 1,638 kbpd, reflecting a 1.1% QoQ increase and an 8.6% YoY decline.

Cemex 2Q25: Resilient Credit Navigates Soft Results, but Tight Spreads Limit Upside

On July 28, we published our report on Cemex 2Q25 results.

We maintain our Neutral recommendation on Cemex. While we continue to view Cemex as an attractive and resilient LatAm credit, we see limited room for further spread compression at current levels, given macro uncertainty and a lack of near-term catalysts.

Cemex reported somewhat expected weak 2Q25 results. Revenues totaled $4.13 billion, reflecting a 5.3% YoY decline (l-t-l: -4% YoY), missing consensus expectations by 1.8%. The topline contraction was primarily driven by lower revenues in Mexico (down 23.3%) and the US (down 6.2%), partially offset by improvements in Europe (up 7.3%) and the Middle East and Africa (up 38.0%). The company generated EBITDA of $823 million, down 10.8% YoY (l-t-l: -9%), broadly in line with consensus, missing by just 0.6%. The EBITDA margin contracted 1.2 pp YoY to 20.0%, reflecting the drag from Mexico and the US, where weaker volumes and FX headwinds diluted otherwise solid pricing and cost-efficiency efforts. Cemex reaffirmed its flat EBITDA guidance for 2025, supported by accelerated cost-efficiency measures. Its Project Cutting Edge program raised the 2025 EBITDA savings target to $200 million, up from the initial $150 million, and aims for a $400 million run rate by 2027.

Vista 2Q25: Results Reinforce Overweight, But Cash Burn and Liquidity Weaken Buffer

On July 14, we published our report on Vista 2Q25 results.

We maintain our Overweight recommendation on Vista Energy, with a preference for the 2033 notes, which offer a modestly higher yield despite lower duration risk.

Vista reported 2Q25 results marked by a strong operational ramp-up and the first quarter of consolidated results following the PEPASA acquisition. The company delivered adjusted EBITDA of $405 million, up 46.9% QoQ and 40.3% YoY, coming in 2.0% above consensus, supported by a 46% sequential increase in production to 118.0 Mboe/d. This reflected the inclusion of 50% of La Amarga Chica, which returned to 4Q24 production levels. Despite a 9.3% sequential decline in realized oil prices, adjusted EBITDA margin expanded 3.4 pp QoQ to 66.3%, driven by the elimination of trucking costs and continued operating efficiency. In 2Q25, 84% of domestic oil volumes were sold at export parity-linked prices, while the remaining 16% of total oil sales were exports. As a result, all of Vista’s oil volumes, both domestic and exported, were effectively sold at export parity pricing.

Weekly News

MercadoLibre Launches Credit Card in Argentina

MercadoLibre’s fintech unit Mercado Pago announced the launch of its first credit card in Argentina, backed by Mastercard. The card, available in both physical and virtual formats, will be gradually distributed via its app in the coming weeks. It carries no issuance or maintenance fees and offers up to three interest-free installments on purchases over P$30,000 made on MercadoLibre’s marketplace or at merchants using Mercado Pago’s QR system. According to company president Juan Martin de la Serna, the initiative builds on the strong growth of MercadoLibre’s credit portfolio and aims to expand financing access for users with limited or no credit history. The product is fully integrated with Mercado Pago’s digital account, enabling end-to-end management through the app.

EM Spreads’ take: We think the launch of a credit card in Argentina reinforces Mercado Pago’s strategy of deepening financial inclusion and expanding its consumer credit footprint in a market with limited access to traditional banking. The absence of fees and installment incentives could drive adoption, while digital account integration should support usage and data collection.

Fitch Affirms Minerva at BB; National Scale Upgraded to AAA(bra)

Fitch Ratings affirmed Minerva’s Long-Term Foreign and Local Currency IDRs at BB and maintained a Stable Outlook, while upgrading the National Scale rating to AAA(bra) from AA+(bra). The senior unsecured notes rating at Minerva Luxembourg S.A. was also affirmed at BB. The upgrade on the National Scale reflects Fitch’s view of Minerva’s enhanced scale and geographic diversification following the acquisition of Marfrig’s beef assets at YE24, which boosted capacity by 42%. Fitch projects EBITDA margins to remain above industry averages and expects positive FCF to support net leverage at around 3.0x YE25, down from gross leverage of 5.2x.

Fitch highlighted Minerva’s competitive positioning as Latin America’s largest beef exporter, operating 43 plants across Brazil, Argentina, Uruguay, Paraguay, Colombia, Chile, and Australia. Export volumes are forecast to increase to 1.9 billion metric tons in 2025 from 1.5 billion in 2024. While U.S. tariffs on Brazilian beef are seen as credit neutral, Fitch noted Minerva’s ability to mitigate risks through exports from other geographies. Liquidity is considered strong, with R$12.6 billion in cash against R$27.2 billion in debt as of June 2025. The rating agency projects EBITDA of R$4.9 billion and CFFO of R$1.2 billion in 2025, with positive FCF supported by modest capex (1.8% of revenues) and a minimum dividend payout policy.

Government’s PEMEX Support Credit Neutral for Mexican Banks

Fitch said PEMEX’s new financial plan is broadly credit neutral for Mexican commercial and development banks. The plan should reduce commercial bank exposure to the public sector via loan repayments, though sovereign and GRE exposures will remain significant, accounting for about 26% of total assets, or 2.8x CET1 at 1Q25. The measures include the creation of Eagle Funding, which issued US$12bn in P-Caps, and a new P$250bn PEMEX Investment Fund, financed by development and commercial banks through sovereign-guaranteed loans.

Commercial banks’ direct exposure to PEMEX remains low, but supplier financing could add to asset-quality pressures, with NPLs in this segment rising to 3.4% in June 2025 from 0.2% in March. Banks are unlikely to increase PEMEX exposure due to prudential lending standards and internal risk guidelines. Development banks, however, are expected to maintain and possibly increase participation, given their policy mandate and strong capital positions (Banobras 24.6%, Bancomext 17.3%, Nafin 18.1% capital ratios at 1Q25). Fitch also noted PEMEX’s rating was upgraded to BB from B+ after the USD12bn P-Cap issuance, with sovereign support viewed as neutral for Mexico’s BBB-/Stable rating.

See Also:

• Telecom (August 21, 2025): Telecom 2Q25: Neutral Amid Uncertainties While Upside Remains Limited

• Suzano (August 19, 2025): Suzano 2Q25: Credit Resilient but Curve Positioning Shift

• YPF (August 15, 2025: YPF 2Q25: Encouraging Strategic Progress Supports Overweight View

• Minerva (August 12, 2025): Minerva 2Q25: Strong Results and Deleveraging Support Overweight Call

• Mercado Libre (August 10, 2025): MELI 2Q25: Constructive on Growth Prospects, Limited Spread Compression

• CSN (August 6, 2025): CSN 2Q25: Stable Credit Metrics and Attractive Carry Support Overweight

• Gerdau (August 4, 2025): Gerdau 2Q25: Credit Resilience Supported by US Exposure

• Pemex (July 31, 2025): Pemex 2Q25: Strong Government Backing Anchors Credit

• Cemex (July 28, 2025): Cemex 2Q25: Resilient Credit Navigates Soft Results, but Tight Spreads Limit Upside

• Market Commentary (July 16, 2025): U.S. Tariff Escalation: Credit Implications for Brazilian Companies in Our Coverage

• Vista (July 14, 2025): Vista 2Q25: Results Reinforce Overweight, But Cash Burn and Liquidity Weaken Buffer

• Gerdau (June 23, 2025): Initiating Coverage on Gerdau: IG Credit with US Exposure, Limited Spread Upside

• CSN (June 13, 2025): Initiating Coverage on CSN: Overweight on Risk-Reward

• Suzano (June 6, 2025): Suzano to Acquire 51% of Kimberly-Clark’s International Tissue Business for $1.73bn

• Vista (June 5, 2025): Vista Priced US$500mn 2033 Unsecured Notes at Par to Yield 8.5% (IPT: mid-8%)

• Cemex (June 4, 2025): Cemex Launches US$1bn Perpetual NC5 Notes to Yield 7.2% (IPT: 7.625%)

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Market Snapshot

The LatAm Aggregate Index widened by 6 bps to 293 bps in the week ending Friday, July 18, 2025, and is now trading 21 bps below its 3-month average of 314 bps. The broader Emerging Market Index held relatively steady at 179 bps, reflecting a 19 bps contraction from its 3-month average of 197 bps. Meanwhile, the U.S. Aggregate Index tightened by 2 bps to 112 bps, 14 bps below its 3-month average of 126 bps. Notably, the EM CCC Index widened by 26 bps and is now 46 bps below its 3-month average of 726 bps, while the U.S. CCC Index rose 13 bps to 658 bps, 35 bps tighter than its 3-month average of 693 bps.

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