Minerva 3Q25: Stronger Credit as Integration Completes, Margins Under Pressure

Improved leverage and liquidity offset margin pressure from higher cattle costs and modest interest coverage

We maintain our Overweight recommendation on Minerva. We see the 2033 notes offering higher carry with less duration risk than the 2031 notes. While current yields are less compelling than six months ago, the 2033s still offer an attractive 6.7% yield for a 3.8-year duration, compared to the 2031s yielding 6.1% for a 4.6-year duration. The 2033 notes trade wide to the EM BB curve and close to the LatAm BB curve, while the 2031s trade tight to both benchmarks. This preference is further supported by comparisons with BB-rated peers.

However, we note that the 2033 notes are priced at $109.2, implying limited upside potential and higher sensitivity to spread widening than the 2031 notes priced at $92.1, which offer more room for capital appreciation, a positive pull-to-par advantage, and better downside protection. From a carry-to-duration standpoint, we favor the 2033 notes.