The Long and Short
M&A headlines return for Acelen
This material is a Marketing Communication and does not constitute Independent Investment Research.
The reemergence of the often-discussed M&A narrative for Acelen, the Brazilian energy company, is obviously positive for prices in the MCBRAC bonds. A Petrobras-owned refinery would likely translate into premium prices for the outstanding bonds. The last 12 months offered little headline news. But now we are back, with frequent mentions by Brazil’s President Lula of the operating logic that Acelen’s Mataripe refinery is operating at only 60% of capacity while Petrobras’ refiners are operating at full bore. The narrative also speaks directly to his Bahian base, where prices at the pump are higher, since Acelen adjusts to international price parity (IPP) more frequently than Petrobras, particularly in the recent materially positive price slope.
Additionally, over the last year at the company level, the tax credit support materialized to offer a large buffer to liquidity and the company has executed on strong cost management initiatives as crack spreads improved from the lows in 2024, driving foundational support to bond prices. Results for the fourth quarter of 2025 will be released during the last week of April and should show a solid performance with reported EBITDA in the $155 million area, enabling the credit to further pay down working capital facilities and maintain a large cash balance into 2026. In January and February diesel cracks in the $30/bl area signaled a solid first quarter of 2026; however, since the conflict in the Persian Gulf erupted, March cracks have surpassed $70/bl, with Acelen changing prices twice weekly to align with IPP, versus the normal weekly adjustments.
Within Brazil, Petrobras has been absorbing the price volatility, selling diesel at significant discounts to IPP; however, with 80% of Acelen’s diesel sold within Bahia, the company is largely shielded from these competitive dynamics. Outside of Bahia, representing the 20% balance of diesel sales, Acelen is offering discounts; however, given the market is short refined products in general, the pricing matrix is a mix of IPP, Acelen pricing and Petrobras’ discount offerings.
While diesel prices have spiked in March and April and VLSFO has turned positive from negative levels in January and February (limiting Acelen’s ability to ramp up utilization and garner greater cost dissolution) gas prices have lagged, remaining under $10/bl year-to-date, on average. Furthermore, after purchasing oil at or below Brent price in January and February, the highly demanded Brazilian product is now trading at a $1 to $2 dollar premium for Acelen and in general. Thus far however, the diesel price spike, with cracks consistently north of $60/bl in March and April, are offsetting the higher costs and since March and April feedstock was purchased in February, March is likely to be a record month for Acelen. Even with a cessation of hostilities in the very near term and a debottlenecking in the region, April and May are likely to see elevated spreads also. These elevated product prices compare to the 2022 onset of the Ukrainian war, when diesel margin was $45/bl to $50/bl, driving consolidated cracks into the mid-teens. Then, however, Acelen costs were $11/bl to $12/bl compared to around $7/bl now, driving significantly more convexity for cash generation.
Earlier in the year, based on feedstock pricing of around IPP + 0.50c and extrapolating existing margins ($11/bl crack and <$7/bl in total costs), organic EBITDA was to be in the area of $300mn this year, before adding another $200mn in tax credits to the calculation, more than adequate to meet the $103mn in scheduled bond amortizations in 2026. Now, though feedstocks will be somewhat higher on average, the margin will more than compensate and while the tax credit expectation is probably around $190 million this year (lower than initially guided, due to the recent PIS/Cofin elimination on diesel from March to May), cash generation is expected to exceed initial expectations.
For the next couple of amortization dates, we are still not anticipating any cash sweep payments, though this view may be amended if cash generation exceeds these improved expectations. At current prices, in the low 9% yield area, the bonds trade about 413 bps over the Petrobras 5.75% 2029 note issue. This is about 250 bps tighter than the YTD wides in February, meaning that the market is now absorbing the higher crack spreads and taking the M&A potential a bit more seriously. As long as Lula remains the favorite for the October election, the relationship will likely hold. If Petrobras were to acquire the asset, a spread differential of 200 bps would imply a $101 bond price, which provides some aspirational upside to the bonds in the coming months. Further, based on the aforementioned expectations for the 4Q25 reporting catalyst combined with the benefit from recent price spikes that will likely be crystalized on the upcoming conf call, the bonds are set to be supported in the near term, though if we are on the precipice of a more functional environment in the Strait of Hormuz, the bonds will probably see some profit taking, resetting some entry points for longer-term trade ideas.
This material is intended only for institutional investors and does not carry all of the independence and disclosure standards of retail debt research reports. In the preparation of this material, the author may have consulted or otherwise discussed the matters referenced herein with one or more of SCM’s trading desks, any of which may have accumulated or otherwise taken a position, long or short, in any of the financial instruments discussed in or related to this material. Further, SCM may act as a market maker or principal dealer and may have proprietary interests that differ or conflict with the recipient hereof, in connection with any financial instrument discussed in or related to this material.
This message, including any attachments or links contained herein, is subject to important disclaimers, conditions, and disclosures regarding Electronic Communications, which you can find at https://portfolio-strategy.apsec.com/sancap-disclaimers-and-disclosures.
Important Disclaimers
Copyright © 2026 Santander US Capital Markets LLC and its affiliates (“SCM”). All rights reserved. SCM is a member of FINRA and SIPC. This material is intended for limited distribution to institutions only and is not publicly available. Any unauthorized use or disclosure is prohibited.
In making this material available, SCM (i) is not providing any advice to the recipient, including, without limitation, any advice as to investment, legal, accounting, tax and financial matters, (ii) is not acting as an advisor or fiduciary in respect of the recipient, (iii) is not making any predictions or projections and (iv) intends that any recipient to which SCM has provided this material is an “institutional investor” (as defined under applicable law and regulation, including FINRA Rule 4512 and that this material will not be disseminated, in whole or part, to any third party by the recipient.
The author of this material is an economist, desk strategist or trader. In the preparation of this material, the author may have consulted or otherwise discussed the matters referenced herein with one or more of SCM’s trading desks, any of which may have accumulated or otherwise taken a position, long or short, in any of the financial instruments discussed in or related to this material. Further, SCM or any of its affiliates may act as a market maker or principal dealer and may have proprietary interests that differ or conflict with the recipient hereof, in connection with any financial instrument discussed in or related to this material.
This material (i) has been prepared for information purposes only and does not constitute a solicitation or an offer to buy or sell any securities, related investments or other financial instruments, (ii) is neither research, a “research report” as commonly understood under the securities laws and regulations promulgated thereunder nor the product of a research department, (iii) or parts thereof may have been obtained from various sources, the reliability of which has not been verified and cannot be guaranteed by SCM, (iv) should not be reproduced or disclosed to any other person, without SCM’s prior consent and (v) is not intended for distribution in any jurisdiction in which its distribution would be prohibited.
In connection with this material, SCM (i) makes no representation or warranties as to the appropriateness or reliance for use in any transaction or as to the permissibility or legality of any financial instrument in any jurisdiction, (ii) believes the information in this material to be reliable, has not independently verified such information and makes no representation, express or implied, with regard to the accuracy or completeness of such information, (iii) accepts no responsibility or liability as to any reliance placed, or investment decision made, on the basis of such information by the recipient and (iv) does not undertake, and disclaims any duty to undertake, to update or to revise the information contained in this material.
Unless otherwise stated, the views, opinions, forecasts, valuations, or estimates contained in this material are those solely of the author, as of the date of publication of this material, and are subject to change without notice. The recipient of this material should make an independent evaluation of this information and make such other investigations as the recipient considers necessary (including obtaining independent financial advice), before transacting in any financial market or instrument discussed in or related to this material.
Important disclaimers for clients in the EU and UK
This publication has been prepared by Trading Desk Strategists within the Sales and Trading functions of Santander US Capital Markets LLC (“SanCap”), the US registered broker-dealer of Santander Corporate & Investment Banking. This communication is distributed in the EEA by Banco Santander S.A., a credit institution registered in Spain and authorised and regulated by the Bank of Spain and the CNMV. Any EEA recipient of this communication that would like to affect any transaction in any security or issuer discussed herein should do so with Banco Santander S.A. or any of its affiliates (together “Santander”). This communication has been distributed in the UK by Banco Santander, S.A.’s London branch, authorised by the Bank of Spain and subject to regulatory oversight on certain matters by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).
The publication is intended for exclusive use for Professional Clients and Eligible Counterparties as defined by MiFID II and is not intended for use by retail customers or for any persons or entities in any jurisdictions or country where such distribution or use would be contrary to local law or regulation.
This material is not a product of Santander´s Research Team and does not constitute independent investment research. This is a marketing communication and may contain ¨investment recommendations¨ as defined by the Market Abuse Regulation 596/2014 ("MAR"). This publication has not been prepared in accordance with legal requirements designed to promote the independence of research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. The author, date and time of the production of this publication are as indicated herein.
This publication does not constitute investment advice and may not be relied upon to form an investment decision, nor should it be construed as any offer to sell or issue or invitation to purchase, acquire or subscribe for any instruments referred herein. The publication has been prepared in good faith and based on information Santander considers reliable as of the date of publication, but Santander does not guarantee or represent, express or implied, that such information is accurate or complete. All estimates, forecasts and opinions are current as at the date of this publication and are subject to change without notice. Unless otherwise indicated, Santander does not intend to update this publication. The views and commentary in this publication may not be objective or independent of the interests of the Trading and Sales functions of Santander, who may be active participants in the markets, investments or strategies referred to herein and/or may receive compensation from investment banking and non-investment banking services from entities mentioned herein. Santander may trade as principal, make a market or hold positions in instruments (or related derivatives) and/or hold financial interest in entities discussed herein. Santander may provide market commentary or trading strategies to other clients or engage in transactions which may differ from views expressed herein. Santander may have acted upon the contents of this publication prior to you having received it.
This publication is intended for the exclusive use of the recipient and must not be reproduced, redistributed or transmitted, in whole or in part, without Santander’s consent. The recipient agrees to keep confidential at all times information contained herein.
