Suzano (SUZB3 BZ)

Materials

EM Spreads

Despite additional industry supply, tight market conditions persist due to low stock levels, maintenance-related production cuts and operational disruptions. Healthy pulp prices, higher sales volumes, controlled costs and a focus on deleveraging should support Suzano’s cash generation and credit profile in 2025, with this trend likely continuing as no major new supply is expected. Within Suzano’s capital structure, EM Spreads prefers the 3.750% 2031 and 3.125% 2032 bonds, which compare favourably to select regional peers, the broader EM BBB Index, and the US BBB Index. Additionally, these notes trade below par at $90.1 and $84.6, respectively, while most of Suzano’s curve remains priced above par.

Edition: 205

- 21 February, 2025

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Sustainable plays in a diverging world

Sustainable Market Strategies

Diverging economic activity between EMs and DMs suggests that investors should look for opportunities in EM companies with credible sustainability characteristics. If most of USD strength is behind us, then EM companies with exposure to global markets could benefit from weak exchange rates before they start appreciating against the USD over the medium term – and those with exposure to India’s secular growth story should continue to perform well in the current environment. From a tactical perspective, holding a diversified basket of EM sustainable companies in various industries and countries could offer interesting upside for investors looking to gain exposure outside of traditional DM sustainability plays. In this context, SMS believes that companies such as Hero Motorcorp, Suzano and Klabin offer good value at a reasonable price.

Edition: 161

- 26 May, 2023

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