EM LATAM CREDIT: Falabella: 2Q 2025 Earnings - Positive
(BFALA; NR/BB+/BB+)
"Falabella’s Second Quarter Profit Rises on Retail Unit Strength" - Bbg
Chile's department store retailer Falabella reported strong 2Q results with a 9% increase in revenues and a 46% rise in EBITDA YoY, driven by a 370bp expansion in EBITDA margin.
Meanwhile, net debt dropped 34% YoY resulting in net leverage at 1.9x which was lower than 2.5x last quarter and 4.7x 2Q 2024.
It has been almost 2 years since Falabella lost its investment grade ratings from S&P and Fitch. Given the consistency of strong results the past three quarters we would expect some positive rating actions in the near term with the balance sheet displaying investment grade metrics.
BFALA 32s were last quoted T+143bp, 3bp tighter QTD and 52bp tighter YTD. The spread to the other major Chilean retailer with USD bonds outstanding and a much higher credit rating, Cencosud (CENSUD; Baa3/NR/BBB), was 51bp which was not much changed from year end despite three impressive quarters of earnings results.
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GLOBAL POLITICAL RISK: Week Ahead 14-20 July
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(MNI) London – All timings are subject to change.
Monday 14 July:
- United States-Russia: President Donald Trump has teased a ‘major announcement’ regarding Russia on the occasion of a meeting at the White House with NATO Secretary General Mark Rutte. The two will hold talks behind closed doors at 10:00ET (15:00BST, 16:00CET). Trump’s increasing frustration with Russia’s intransigence in moving towards peace talks in Ukraine has been evident of late, with speculation that the president could announce a major escalation in sanctions or a significant increase in the provision of weaponry to Kyiv. German Defence Minister Boris Pistorius meets with US Secretary of Defence Pete Hegseth in an effort to push for the US to increase its supply of Patriot missile systems to Ukraine via Germany and other NATO partners.
