The Long and Short
Relative value now likes Orbia over Alpek
This material is a Marketing Communication and does not constitute Independent Investment Research.
A surge in petrochemical profitability after war broke out in the Persian Gulf transformed Alpek’s credit profile and left Orbia behind. But momentum is shifting. Alpek’s leverage dropped to 2.2x from 3.9x in the first quarter and its bonds rallied. The move produced a 170 bp swing in spreads to Orbia, leaving Orbia’s 2031 bonds 45 bp wider than comparable Alpek. With Alpek’s profitability likely normalizing in the second half and Orbia earnings improving from a more diversified operating base, relative value has shifted toward Orbia. Its longer-dated bonds also yield more than 8%, adding upside if the curve keeps flattening or asset sales speed up debt reduction and improve the ratings outlook.
Alpek reported strong second-quarter results. Comparable EBITDA was $336 million, more than double the levels in both the first quarter and the year-earlier period. Stronger commodity margins and solid performance in its two main businesses drove the gain. More than 30% of sales are tied to spot pricing, a share that rose during the quarter, so Alpek benefited more than most from the jump in global petrochemical spreads after the conflict began. EBITDA per ton rose to $487 from $297 in the first quarter. Reported EBITDA was $407 million, including a $66 million inventory gain from higher raw-material prices and a $6 million gain from the Beaver Valley sale.
Higher prices and volumes increased working-capital requirements, but Alpek remained free-cash-flow positive and reduced net debt by $104 million to $1.66 billion. The company also raised its 2026 EBITDA guidance to $750 million – $800 million from $450 million – $550 million, excluding potential proceeds from additional asset sales. The revised outlook reflects the strong first-half performance while assuming some normalization in petrochemical spreads during the remainder of the year. The second-quarter performance materially increased last-12-month EBITDA and cut net leverage to 2.2x from 3.9x in in the first quarter and 3.5x a year earlier. This marked a significant reversal from the deterioration in credit metrics during 2025 that contributed to Alpek’s downgrade to high yield. Current leverage sits near the midpoint of management’s 2.0x – 2.5x target range. As petrochemical spreads normalize, albeit remaining above recent lows, further cash generation should support the balance sheet. With leverage already within the target range, however, excess cash likely eventually shifts toward shareholder distributions, potentially later in 2026 but more likely in 2027. That limits how much investors should count on future cash flow becoming permanent debt reduction.
Orbia also reported strong second-quarter results across its diversified business. EBITDA reached $467 million, up 80% sequentially and 56% from a year earlier. Polymer Solutions, Building & Infrastructure, and Fluor & Energy Materials were the main contributors. The company raised its 2026 EBITDA outlook from $1.1 billion – $1.2 billion to at least $1.2 billion while maintaining its $400 million capex guidance. The relatively conservative increase reflects expectations that PVC resin margins will normalize during the second half. Unlike Alpek, stronger earnings did not translate into debt reduction. Orbia burned $73 million of cash during the quarter as higher raw-material costs contributed to $185 million of working-capital usage. Net debt increased by $157 million sequentially to $4.1 billion from $3.9 billion in the first quarter. Growth in LTM EBITDA more than offset the increase in debt however, allowing reported net leverage to decline to 3.3x from 3.6x in the first quarter, its lowest level since the fourth quarter of 2024. Management continues to target leverage of approximately 3.0x in 2026.
The contrast between the two companies has created meaningful price dislocation over the last twelve months. Alpek enters the second half with lower leverage and stronger near-term balance-sheet momentum, but a meaningful portion of that improvement followed an anomalous commodity price environment. Orbia has higher leverage and generated weaker cash flow during the quarter, but its earnings recovery is spread across a more diversified portfolio and is less dependent on maintaining the exceptional petrochemical margins seen during 2Q26.
While Alpek’s results drove its outperformance in recent months, current valuations we believe, more than reflect the metric trend. With Orbia’s 2031 bonds now roughly 45 basis points wider than comparable Alpek paper, investors are being compensated for Orbia’s higher leverage at a point when its operating performance is improving and leverage is moving toward management’s target. Potential asset sales or other portfolio actions provide an additional catalyst where proceeds are more likely to be directed toward debt reduction, thus accelerating Orbia’s deleveraging and creating further spread-compression potential. There is also value within Orbia’s curve: the curve has flattened as investors have become more comfortable absorbing longer-duration high-yield risk. With the 2044 bonds trading about 70 basis points wider than the 2031s, we see further spread compression potential and continue to like the long end at 8%+ in yield.
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.
