Credit Focus: JBS S.A. / JBS USA

Quick Take:  We believe upcoming news flow on JBS should prove to be supportive for near-term spread tightening for the newly issued JBS 2033s and 2053s, as we see 20-40bp of compression vs. peer TSN. JBS (Baa3 sta/BBB- neg) is in the market with a new issuance of USD1.0bn 10Y and USD1.0bn 30Y. We see JBS FV at +50bp vs. TSN in 2024 in a US-listing scenario. With JBS issues trading +90bp back from TSN today, we like the idea of swapping TSN issues for the new JBS issues. JBS and TSN have strikingly similar credit profiles, which could warrant even tighter relative spreads if not for the elevated governance risk at JBS as well as a “Brazil premium” The proteins complex remains considerably challenged through FY24, particularly US beef. As such, we would consider relative trades and see value in JBS’s geographic and product segment diversification.