EM LATAM CREDIT: Mexico's Orbia (ORBIA; Baa3neg /BBB-neg /BBB) 1Q Earnings
“Orbia Announces First Quarter 2025 Financial Results” – BBG
Negative for spreads
• Mexico diversified manufacturer Orbia reported disappointing results with past challenges in their Polymers and infrastructure businesses persisting.
• Led by a 9% decline in North American sales YoY, total sales fell 3% while EBITDA rose 3%, adjusted for extraordinary legal and restructuring charges.
• Lower PVC prices, which plagued the business last year persisted into 2025 while weakness in European demand weighed on the building and infrastructure business.
• Free cash flow was -USD155mn which led to an increase in net debt and an increase in net debt / adjusted EBITDA to 3.23x from 3.04x.
• ORBIA 2031s were last quoted T+270bps, 45bps wider MTD and 95 bps wider YTD. The 2044s were last quoted T+295bps, 32bps wider MTD and 45bps wider YTD.
• Moody’s placed the ratings on negative outlook last year with concerns about a delayed deleveraging process while S&P also had concerns about leverage and these latest results do not allay those concerns with free cash flow negative, debt rising and business challenges persisting.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
EUR: EURUSD Slides to Fresh Weekly Low Amid Supportive Greenback Tone
- A broader greenback bid sees EURUSD slide through the overnight/Tuesday lows of 1.0778/77 respectively, which extends the pair’s pullback from its recent high.
- The move down is still considered technically corrective at this juncture, and first support to watch is 1.0763, the 20-day EMA. Below here, more significant support is seen further out at 1.0631, a key short-term pivot level.
UK DMO UPDATE: "Programmatic gilt tenders" to be introduced for off-the-run gilt
- The DMO's remit notes that:
- "The DMO will be introducing programmatic gilt tenders in 2025-26 to assist with the delivery of the financing remit. It is envisaged that these operations will typically involve the sale of "off-the-run" gilts. The DMO will announce the planned dates of these gilt tender operations as part of its quarterly gilt issuance calendar and will typically include the type and maturity sector (for conventional gilts) of the gilt to be tendered in each case, taking into account market feedback both ahead of each quarter and, with respect to the identity of the gilt to be issued, closer to each tender date. Market participants will be consulted on the identity of the gilt and the maximum size to be offered at each individual gilt tender ahead of the planned gilt tender date. The gilt, nominal size, and scheduled tender date will typically be confirmed at least two business days prior to the planned tender date."
- We assume that this is the main reason behind the larger unallocated bucket.
- But what it means is there is actually LESS certainty that the unallocated bucket will end up in mediums / longs.
- Note that in the current fiscal year, the DMO held three tenders for the 0.125% Jan-26 gilt.This kind of operation may become more common if there is market demand.
- So shorts could actually end up being larger than announced here.
- We will know more on how the DMO plans to run this in the consultation agenda which is due out at 15:30GMT.
US: Large downside SFR Options
- SFRZ5 95.62/95.37ps, bought for 1.75 in 60k total (pit and screen).
- SFRM5 95.50p, bought for half in20k.
