EM LATAM CREDIT: Earnings Results 2024 Mexico's Alfa (ALFAA; Baa3/BBB-*+/BBB)
Fourth Quarter 2024 Earnings Report
Positive for spreads
• Alfa, formerly a Mexican conglomerate and now the holding company for processed foods producer Sigma Alimentos (SIGMA; Baa3/BBB-*+/BBB), has 20-year bonds last quoted T+160bps with a past three month trading range of T+150-180 bps. Bonds have tightened 20 bps post the Fitch upgrade to ‘BBB’ February 10th.
• Net debt/EBITDA leverage target of 2.5x was achieved with a capital increase of USD392mn and free cash flow generation. Comparable EBITDA was down 8% Q/Q but was up 15% Y/Y.
• The company spun off its telecom company Axtel in May 2023 and spun off its chemical subsidiary Alpeka so now it will be left with its main subsidiary Sigma which will guarantee its debt. Sigma is a geographically diversified food processor that generates about 50% of its revenues outside of Mexico and with an investment grade balance sheet it resembles Grupo Bimbo (BIMBOA; Baa1/BBB+/BBB+), the Mexican bread maker, which has 2044 bonds quoted much tighter at T+120 bps.
Webcast:
FEBRUARY 19, 2024
1:00 p.m. (Eastern, NY)
12:00 p.m. (Central Time, CDMX)
https://www.alfa.com.mx/en/events/#:~:text=FEBRUARY%2019%2C%202024,Central%20Time%2C%20CDMX)
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USDCAD TECHS: Breaches Support
- RES 4: 1.4671 2.0% 10-dma envelope
- RES 3: 1.4539 3.382 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 2: 1.4508 3.236 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 1: 1.4486 Intraday high
- PRICE: 1.4280 @ 14:42 GMT Jan 20
- SUP 1: 1.4262 Intraday low
- SUP 2: 1.4226 50-day EMA
- SUP 3: 1.4120 Low Dec 11
- SUP 4: 1.4011 Low Dec 5
A sharp sell-off in USDCAD today has resulted in a print below support at 1.4280, the 20-day EMA. Pice has also traded through the 20-day EMA, at 1.4364. The reversal has exposed the next key support at 1.4226, the 50-day EMA. A clear breach of the 50-day EMA would undermine the recent bullish theme and signal scope for a deeper retracement. Key resistance and the bull trigger has been defined at 1.4486, today’s intraday high.
US: Early Trump Memos Boost Tariff Targets and Those With High EUR Exposure
- Trump's early policy memos clearly a very risk-positive mix judging by both the initial headlines as well as the follow-up from Reuters. The biggest movers being those seen as most exposed to a quicker, harsher tariff regime - as such CAD, MXN and EUR trade very well indeed - as telegraphed by the surge in overnight vols earlier today.
- It's not just tariff-linked currencies that are benefiting today, with peripheral European currencies with a higher beta to Europe outperforming all others. As such, CZK, PLN and HUF make up the best performers globally - having already traded stronger into the headlines.
- In sympathy with the risk-positive backdrop, materials names and stocks with most exposure to global trade in Europe have lurched higher - this puts the likes of Daimler Trucks, BMW, Mercedes solidly higher, with airlines rallying also.
- While US cash trade remains closed - the e-mini S&P now trades through the YTD high, and will presumably gap sharply higher at tomorrow's open should this move hold. Bond futures hold the post-headline rally, with Treasury futures >10 ticks higher - we noted earlier today that bonds are seemingly pricing out the immediate risk of inflation-supporting tariff risk here - which should translate to a lower front-end of the US curve when markets fully reopen Tuesday.
US: Trump Admin Likely To Push For Change Of Govt In Venezuela
Advisors to US President-elect Donald Trump told Axios that the incoming administration wants regime change in Venezuela but that “doesn't necessarily mean military action.”
- A Trump adviser involved with foreign policy discussions said: "We wouldn't mind one bit seeing [President Nicolas] Maduro being neighbors with [former Syrian President Bashar al] Assad in Moscow," adding that Maduro is "literally ruining the country ... massive refugee issues, sending criminals to the United States, oil production is down, and there are Chinese, Russians and Cubans in there."
- Axios notes: “Oil interests and investors mounted a pressure campaign late last year to try to smooth relations between the U.S. and Venezuela. In November, they proposed what amounted to an oil-for-migrants deal in which the U.S. would ease sanctions and get more oil products like asphalt from Venezuela. In turn, Venezuela would agree to slow emigration or maybe take back millions of migrants deported from the U.S. But Trump hasn't sounded enthusiastic about striking a deal with Maduro."
