Cemex Enters Junk Territory

Cemex, once one of LatAm’s bluest of industrial blue chips, has lost its investment grade rating from Fitch. The agency has downgraded the Mexican cement maker to BB+ with a negative outlook, from BBB minus, citing high leverage levels, reduced liquidity and weaker than expected operating results. “While the company has been able to reduce debt by close to $3.0bn since the Rinker acquisition, leverage remains higher than originally anticipated,” says Fitch. On September 30, Cemex had total adjusted debt of $23.3bn. Cemex’s liquidity position is also tight: it faces maturities of $5.7bn next year, notes Fitch. Still, some investors view the credit as a solid name to be holding. “I don’t have any fears that they are going to default,” says one buysider, noting that the rash of recent downgrades in LatAm simply means tighter covenants and more secured issuances going forward.