The Varel bonds are trading extremely wide vs. its peer group. Although Y/Y delta will be negative for 2025E and the company has made several negative adjustments to its guidance, the company is still not in a distressed position in our view. At an unadjusted EBITDA of USD 20-25m the company should be able to service cash interest on the bond, and the NWC+PP&E assets should provide a solid cushion in a worst case scenario. More details can be found in the attached slides. Outperform.
