Braskem - Initiating Coverage: Event-Driven Value, Liquidity and Policy Catalysts

State ownership, political relevance and large domestic footprint reduce default risk, but recovery relies on liquidity bridge, governmental support, and PRESIQ approval

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.