EM LATAM CREDIT: Minerva/Marfrig/BRF - Merger Regulatory Approval - Neutral
(BEEFBZ; NR/BB/BB)
(MRFGBZ; NR/BB+/BB+)
(BRFSBZ; Ba2/BB*+/BB+pos)
"CADE gives Marfrig (MRFG3) and BRF (BRFS3) 10 days to defend themselves against Minerva's allegations" - Exame
The Brazil competition regulator CADE already approved the merger between Marfrig and BRF but then competitor Minerva emerged afterward with an appeal. That should mean that some of Minerva's operational objections will get overruled since CADE presumably already considered those competitive concerns.
What might get some traction though is an ownership conflict of interest. SALIC, a livestock and agricultural company owned indirectly by the Saudi Arabia government, owns about 30% of Minerva but also owned 11% of BRF so will own about 10% of the merged entity named MBRF Global Foods.
An extraordinary shareholders meeting that was postponed since the middle of last month will take place this Monday to approve the merger of the two companies. We think there could be some concessions to get the deal done but nothing material that would block the transaction.
MRFGBZ 31s were last quoted T+240bp, 48bp tighter QTD and 32bp tighter YTD. BRF 30s were last quoted T+204bp, 15bp tighter QTD and 20bp tighter YTD. BEEFBZ 31s were last quoted T+266bp, 32bp tighter QTD and 34bp tighter YTD.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
JGB TECHS: (M5) Rallies Off Lows
- RES 3: 147.74 - High Jan 15 and bull trigger (cont)
- RES 2: 146.53 - High Aug 6
- RES 1: 141.48/142.95 - High May 2 / High Apr 7
- PRICE: 139.19 @ 15:53 GMT Jun 06
- SUP 1: 138.54 - Low May 22
- SUP 2: 136.57 - 1.382 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
- SUP 3: 134.89 - 2.000 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
JGBs have rallied off recent lows, however a bearish theme remains intact following the reversal that started Apr 7. A continuation lower would signal scope for an extension towards 136.57, a Fibonacci projection. On the upside, a reversal higher would instead refocus attention on 142.95, the Apr 7 high. The first important resistance to watch is 141.48, the May 2 high. A break of this level would be viewed as an early bullish signal.
US TSYS/SUPPLY: MNI UST Issuance Deep Dive: June 2025
We've just published our UST Issuance Deep Dive - Download Full Report Here
- May’s refunding round saw guidance as well as coupon sizes for the current quarter unchanged.
- The August round (Jul 28-30) could prove more compelling, reflecting both pressure at the long end of the Treasury curve as well as a shifting fiscal outlook amid tariff revenues contrasted with impending tax cuts (not to mention the likelihood of approaching the debt limit at around that time if it’s not lifted).
- Future Coupon Upsizing: We’ve seen some expectations that Treasury could lean against some of those trends in the August refunding, with potential signals if not immediate action on adjusting buybacks or even reducing issuance duration in order to reduce pressure on the long end. MNI’s current expectation is that coupon sizes will only be increased in early 2026. We will update in our next Deep Dive at end-June, with our full refunding preview coming in late July.
- Upcoming issuance: June is set to see $315B in nominal Treasury coupon sales, in addition to $23B in 10Y TIPS and $28B FRN for a total of $366B. Sales for the month start in the coming week, on Tuesday June 10 with $58B of 3Y Note, Wednesday June 11 with $39B of 10Y Note, and Thursday June 12 with $22B of 30Y Bond.
- May Auction Results: Against a backdrop of continued steepening pressure for global sovereign curves, May’s coupon auctions saw strong sales at the short-end/belly contrasted with tails at the long-end.
US FISCAL: Extraordinary Treasury Measures Tick Up As Cash Depletes
Treasury had $84B in "extraordinary measures" available to keep the government financed as of June 4 per a release Friday. That is up from $68B a week earlier though Treasury has exhausted three-quarters of the total initially available ($362B) when the debt limit impasse began in January.
- Combined with a pullback in Treasury cash ($376B), the total resources available to avert an "x-date" in the summer are down to a total $460B, the lowest since April 10 before the annual tax take accelerated.
- There will be another uptick in Treasury cash late next week/early the following week around the mid-June tax date, but this is likely to be the last major uplift before the summer at which point x-date speculation will pick up if Congress hasn't passed a debt limit increase by then.
