The Long and Short
Seniority and shorter duration favors Movida debt
This material is a Marketing Communication and does not constitute Independent Investment Research.
The bonds issued by Movida, the Brazilian car rental company, have performed well year-to-date despite generally weaker sentiment for high yield Brazil risk. The bonds now trade around 15 bp through the bonds of Simpar, its former owner, compared to an average of 45 bp over the last couple of quarters. This is primarily the result of Simpar outperformance as the market regained comfort with the liquidity at the parent level. From here, the structural seniority and shorter duration of the Movida bonds appear better relative value at around 9%.
Movida’s fourth quarter 2025 results came in strong on the back of price increases and higher volumes in both of main segments of the business while margins in the used car business remained positive. In the rental business, the typically busy summer season saw strong demand driving higher rates. Revenue in the segment increased by 19% year-on-year atop a 7% increase in daily rates and a 12% increase in volumes. The RAC occupancy rate gained 0.9% year-on-year to 75.8%, in turn driving EBITDA growth of 22%, with the margin increasing 1% to 67.0%. In the fleet management unit, higher pricing reflected a continued strong demand for cars. Revenue rose 15% year-on-year on the back of a 2% larger fleet and a 12% increase in monthly revenue per car. EBITDA gained 19% versus the fourth quarter of 2024 with a margin of 75%, up 2.4 percentage points year-over-year. In the used cars business, cash generation was stable as Movida unloaded 22.1 thousand cars in the quarter, slightly lower than the previous quarterly running average of about 25 thousand cars.
The solid quarterly performance dropped down to some balance sheet gains with the company generating around R600 million in cash in the period – though this was a function of lower receivables and higher payable, so is likely to revert in the coming quarters. Reported net leverage decreased to 2.6x at year end, versus 2x in the third quarter of 2025 and 3.1x at the end of the first quarter of 2025, which was the high tick for the year. These data predate the recent capital injection announcement by the parent, which will add to the credit profile in 2026 and also predates funding activities in January and February, whereby the company raised or refinanced R$2.2 billion domestically to largely address 2026 maturities. From here, as local rates decrease somewhat in the next twelve months, we expect additional refinancing and lower overall interest expense as the company continues to shore up balance sheet metrics.
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