埃尔登米尔（EREGLT）：为可持续增长而投资，与同行的价值比较-首次评级为MW

Restricted - External Evgeniia Bystrova+44 (0) 20 7773 4204evgeniia.bystrova@barclays.comBarclays, UK cash balances which is a strong cushion for expected cash burn, while the maturity profile iscomfortable.Structural subordination of the bonds to OpCo debt.The notes are not guaranteed bysubsidiary Isdemir, which accounts for at least 50% of group's EBITDA and 30% of total debt,which we view as a weaker structure compared to peers.We initiate on Erdemir with a Market Weight rating. We recommend to switch intoEREGLT 29s from SISETI 29s.Both Erdemir and Sisecam are facing tough industryconditions, while deploying significant capital for strategic investments. EREGLT 29s andSISETI 29s are trading 0-10bp apart from each other, but we prefer Erdemir due to its strongerliquidity position. ••2 Relative value: Stronger liquidity compared to peers. . . . . . . . . . . . . . . . . 4Company overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Financial profile and outlook. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 1Samarco and CSN 1Q25 Earnings:DifferentOre-bits, 19 May 20252JSW Steel: BPSL clarification creates overhang, 9 May 2025Relative value: Stronger liquidity compared to peersBonds rebounded strongly post-Liberation Day:Erdemir has only one bond – EREGLT 29s –which performed stronglyafter'Liberation Day', delivering excess returns of c1.5% in Q2 QTDand outperforming most Turkiye Corporates in our coverage (Figure 1). Erdemir bondsoutperformed the benchmark, as well as wider Turkiye Corporates basket which was negativelyaffectedby thesell-offin single-B bonds, eg Vestel and Zorlu. EREGLT 29sofferZ-spread ofc415bp currently and now trade 10-15bp tighter than pre-Liberation Day. However, spreads arestill elevated, trading c45bp wider compared to levels before 19 March (arrest of Istanbul'smayor) and c30bp wider YTD. Compared to the sovereign, EREGLT 29soffera c105bp premium,which is slightly tighter than average YTD levels of 120bp, but 20bp wider than February whenspread-to-sovereign was at its lowest level on record at c85bp (Figure 2).Strongest liquidity cushion among cyclical peers:EREGLT 29s trade broadly in line with othercyclical peers in Turkiye – SISETI 29s and WESODA 28s (Figure 3). Erdemir is a single-productproducer with high exposure to Turkiye's domestic market, while Sisecam (UW) and WE Soda(MW) have operations outside of the country and enjoy diversified geography of sales. All threepeers have experienced challenging industry conditions that have negativelyaffectedtheirprofitability, which has also coincided with a period of intensive capex or M&A activity. Erdemirhas the strongest liquidity cushion of the three which should support it through its capexprogramme. We estimate net debt to EBITDA will likely be similar to peers in the 3.5-4.0x rangein 2025-2027 (management guidance 3.3x by YE25). On the other hand, Sisecam's liquidity hasweakened in Q1 25 leaving the company with reduced headroom for investments in the rest ofthe year (Sisecam (SISETI): Heavy cash usage in Q1 25 weakens credit metrics; remain UW, 16May 2025).Erdemir fairly priced among global peers on credit ratings basis:Turkiye Corporates are theclosest peers to Erdemir (B2/NR/BB-) given the country risks and similar technicals in thebonds. However, in a global context, EREGLT 29s also look fairly priced on the basis of overallcredit rating, including compared to other steel producers from emerging markets (Figure 6).For example, EREGLT 29s trade inside the CSN (Ba3/NR/BB) curve, butoffera premium to JSWSteel (Ba1/NR/BB). Erdemir has broadly similar steel EBITDA margin and net leverage levelscompared to JSW and CSN, though they are rated higher as Erdemir's rating is capped byTurkiye sovereign (B1/BB-/BB-). On a standalone basis, for instance, Moody's indicatesErdemir's rating outcome in the BB area. CSN (covered by Ansel Tessitore, BCI, US) has strongervertical integration, but operates in an oversupplied flat steel market in Brazil. Our LatAmCorporate Credit team expects CSN to generate negative FCF and for net leverage to increase to5.0x by YE251. JSW Steel (covered by Imtiaz Shefuddin, Barclays Bank, Singapore) is larger inscale and operates in a fast-growing Indian market with net leverage expected to be around 4.0xin the next 12 months2.We rate Erdemir at Market Weight, and recommend switching to EREGLT 29s from SISETI29s:We view current spread levels as marginally elevated on a YTD and spread-to-sovereignbasis, but further spread tightening in the EREGLT 29s is unlikely unless the global economicoutlook improves substantially and there is a recovery in steel prices. That said, the bondsoffergood carry among BB-rated Turkiye Corporates and will likely benefit from strong technicals inthe event the market moves wider on trade news. For example in April, EREGLT has not movedas wide as WESODA bonds likely supported by demand from local invest