EM LATAM CREDIT: Raizen SA (Baa3/BBB/BBB) Earnings Results
Earnings 3Q of Crop Year 2024/2025 (Ending Dec 2024)
Neutral for spreads
• 10 year bonds of Brazil Fuels distributor and sugarcane processor Raizen tightened 35 bps since February 6, 2025, last quoted T+186bps, when Brazil newspaper Valor reported that the company was considering a capital raise which we said was positive for spreads. That was a big recovery from January 21 when the company announced an earnings warning that triggered an S&P move to outlook negative on the ‘BBB’ rating on January 30th.
• Results disappointed with gross revenues down 35% while adjusted EBITDA fell 21% y/y reported at BRL3.1bn vs BRL3.5bn expected, primarily due to weather conditions. According to the company, Net debt grew 23% from 2023 leaving net debt/ adjusted EBITDA at 3x, an increase from 1.9x in 2023.
• Though results were worse than expected, they were roughly in line with ratings agency expectations and the key to bond performance will be if the company follows through on a capital raise. Call Monday may shed some more light on this open question.
Videoconference February 17, 2025 9:30 am Brasília|7:30 am New York|12:30 pm London
Link to Results:
https://api.mziq.com/mzfilemanager/v2/d/c016735f-1711-48ce-919f-a8c701b83c19/292a65a2-5ec3-bbdb-1ffd-36ff5fb25c07?origin=1