Braskem's Liquidity Strategy Amid Debt Restructuring Risks: Short-Term Moves as Signals for Long-Term Debt Sustainability

In the face of the longest and deepest downturn in the global petrochemical industry, Braskem-the Americas' largest thermoplastic resin producer-has embarked on a high-stakes liquidity strategy to stabilize its debt-laden balance sheet. With total debt hovering near $12 billion and a debt-to-EBITDA ratio of approximately 5x as of late 2024, according to Valor (https://valorinternational.globo.com/business/news/2025/09/29/braskem-to-renegotiate-debts-amid-longest-petrochemical-downturn.ghtml), the company's short-term financing measures are under intense scrutiny as potential indicators of its long-term debt sustainability.

Short-Term Financing Measures: A Glimpse into Strategic Priorities

Braskem has engaged financial and legal advisors, including Lazard and Cleary Gottlieb, to evaluate a range of options to reduce leverage and extend liquidity, ICIS reported (https://www.icis.com/explore/resources/news/2025/09/16/11138184/blog-the-end-of-globalization-creates-new-opportunities-for-european-companies/?news_id=11141643). These include asset sales, capital injections (potentially involving Petrobras, its second-largest shareholder), debt-to-equity swaps, and the postponement of debt maturities, Archyde reported (https://www.archyde.com/braskem-secures-financial-advisors-to-reduce-debt-and-strengthen-finances-bloomberg/). A notable move is the recent bond issuance with an initial yield of 8%, aimed at refinancing maturing debt and buying back bonds maturing in 2081, Riotimes noted (https://www.riotimesonline.com/braskems-strategic-bond-issuance-balancing-debt-and-market-challenges/). While this has temporarily reduced total debt from $12.5 billion in Q2 2024 to $11.8 billion in Q3 2024, Archyde reported, the company's liquidity remains strained. Available cash and revolving credit facilities are projected to fall short of covering debt obligations beyond 2026, the Valor piece projects, raising concerns about refinancing risks.

Liquidity Challenges and Credit Downgrades

Despite these efforts, Braskem's liquidity position has deteriorated. Credit rating agencies have downgraded its outlook to negative, with S&P assigning a 'B+' rating and, as Fitch reported, a 'CCC+' for Braskem (https://www.fitchratings.com/research/corporate-finance/fitch-downgrades-braskem-idr-to-ccc-26-09-2025). Moody's has similarly flagged the company's short-term debt obligations as vulnerable, citing ongoing cash burn and weak operational performance, a point also noted by ICIS. The largest refinancing challenge looms in 2028, with $1.39 billion in maturities, the Valor coverage warns, compounded by a high-interest-rate environment that limits access to affordable capital.

The company's Mexican subsidiary, Braskem Idesa, is also under pressure, with Fitch downgrading its credit rating to 'CCC+' due to declining cash balances and refinancing risks, underscoring the systemic nature of Braskem's liquidity challenges beyond its core operations.

Short-Term Moves as Signals for Long-Term Sustainability

The effectiveness of Braskem's short-term strategies in signaling long-term debt sustainability hinges on two critical factors: structural adjustments and market conditions.

1. Structural Adjustments: Braskem's reliance on asset sales and capital injections, while necessary, may not address underlying operational inefficiencies. For instance, the company's plan to shift to lower-cost natural gas feedstocks and expand green petrochemicals requires significant investment-resources it currently lacks, as reported by Valor. Without meaningful cost reductions or revenue diversification, liquidity gains from short-term measures may be temporary.

2. Market Conditions: The global petrochemical industry remains oversupplied, with trade policy uncertainties further dampening demand, a dynamic that ICIS has highlighted. Braskem's ability to service debt will depend on its capacity to navigate these macroeconomic headwinds. For example, a debt-to-equity swap for Braskem Idesa could temporarily alleviate pressure but may dilute shareholder value and signal distress, a scenario outlined in coverage by Archyde.

Risks and the Path Forward

The engagement of financial advisors has already triggered a negative market reaction, with Braskem's stock falling over 10% in late September 2025, according to ICIS. This reflects investor skepticism about the company's ability to execute a viable restructuring plan. Key risks include:
- Refinancing Failure: Insufficient liquidity to cover 2028 maturities could force a distressed restructuring.
- Credit Rating Downgrades: Further downgrades would increase borrowing costs, exacerbating cash flow pressures.
- Operational Constraints: Delays in transitioning to lower-cost feedstocks or green technologies could leave Braskem uncompetitive in a shifting market, as noted in Valor's coverage.

To achieve long-term sustainability, Braskem must balance short-term liquidity preservation with structural reforms. This includes accelerating asset sales, securing shareholder support for capital injections, and leveraging its strategic partnerships-such as with Petrobras-to stabilize its capital structure, a path advocated in Archyde's reporting.

Conclusion

Braskem's short-term liquidity strategy-while a necessary response to immediate pressures-reveals a fragile path toward long-term debt sustainability. The company's reliance on external financing and its inability to address structural operational challenges highlight the risks of a prolonged restructuring. Investors must weigh the potential for a turnaround against the likelihood of further downgrades and refinancing hurdles. For Braskem, the coming months will be critical in determining whether its liquidity measures are a bridge to stability or a prelude to deeper distress.