EM LATAM CREDIT: Chile's CMPC 1Q 2025 Earnings Results: Negative take
Empresas CMPC (CMPC; Baa3 /BBB /BBB)
• Chile based paper company CMPC, a top pulp and tissue paper producer, reported lower top line and EBITDA both QoQ and YoY driven by weakness in tissue paper operations.
• Sales decreased 7% and EBITDA fell 30% while EBITDA margin shrunk by 510 bps to 15.3% YoY.
• The tissue paper contribution to total EBITDA fell to 27% from 30% in 4Q24 and 44% in 1Q24.
• Free cash flow was USD85mn for the quarter helping to offset the decline in EBITDA. Net debt was sequentially flat while net leverage rose to 3.4x from 3.15x but was lower than 4x a year ago.
• CMPC 2034s were last quoted T+176bps, 9bps wider QTD and 36bps wider YTD.
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US: Tsy's Bessent Plays Up Unified Approach v China; Points To Bank Reg'l Reform
Tsy Sec Bessent says in a Q&A at an event that despite a "little uncertainty" about the economy, "We got some very good jobs numbers last Friday, so I think that we are in pretty good shape." Says so many trade negotiations upcoming that he's "not planning on going anywhere for Easter"
- In his recent appearances, Bessent has been playing up two angles to the upcoming tariff negotiations: 1) a unified approach w China's major Asian trading partners, 2) warning others not to cooperate with China, suggesting the Chinese could trigger a dumping/devaluation/deflationary bust globally:
- "Unfortunately, the biggest offender in the global trading system is China, and they're the only country who's escalated ... the economic minister in Spain made some comments this morning: maybe we should align ourselves more with China. That would be cutting your own throat, because I can tell you that these Chinese exports, that the US tariff wall is going to keep out... For all of you who can remember that Disney movie of the brooms carrying the buckets of water - that is the Chinese business model, it never stops. They just keep producing and producing and dumping and dumping, and it's going somewhere. And I think at the end of the day that we can probably reach the ideal with, with our allies, with the other countries that have been long term good military allies, not perfect economic allies. And then we can approach China as a group."
- On bank regulation, Bessent says "we intend to take a different approach" to the Basel regulations; will "look at the capital buffer framework that applies to the largest banks", hinting at loosening of various rules for US banks.
- "The bank regulators are now hard at work to develop a proposal to ensure that leverage capital functions as appropriate. ...it is time that we step back and reassess .. cost/benefits of the liquidity framework, this assessment should identify opportunities to expand the role of loans and other productive assets as collateral for funding during a period of stress, and thereby help get banks back into the business of lending. For example, we will revisit the role of the discount window and the Federal Home Loan Banks, including whether there are opportunities to clarify the role of these funding sources in internal liquidity stress testing and the supervision of banks contingency funding plans. Our assessment will also consider whether examiners have developed a bias toward reserves over other liquidity sources, and how we can better ensure that liquidity buffers are indeed buffers, not regulatory minimums that banks can draw down during a period of stress."
