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Bond Market News
Braskem’s Dollar Bonds Continue To Plummet
December 7, 2023
Braskem’s dollar bonds continued to plummet by over 3 points as the collapse of its salt mine in northeastern Brazil has seen a section of the town sinking as much as 5cm (2 inches) an hour, according to the Civil Defense. This has forced the city of Maceio to call a state of emergency and order an evacuation of its locals. Filipe Botelho, senior credit analyst at Lucror Analytics said, “None of the potential outcomes seem positive for the company in the near-term… it’s just not the time to pile-on risk… can’t see investors wanting to come in and buy bonds before the dust settles… there should be pressure to sell until the situation improves”. Earlier in the week, Braskem was notified of a BRL 1bn ($205mn) civil action lawsuit on potential damages from the imminent collapse of the mine. Now, the city hall of Maceio has asked to negotiate a new compensation with Braskem over the expansion of the area linked to sinking ground.
Amid the ongoing issues, rating agency Fitch issued a statement noting that mine collapse could materially impact Braskem’s cash flows and pressure its rating. Braskem yesterday announced canceling its corporate credit rating issued by Moody’s, citing cost-cutting efforts. Moody’s however, has said it will continue to cover the credit through an “unsolicited” rating.
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