Cemex Marketing Hybrid Bond In US

Mexico’s Cemex is on the road in the US with a dual-tranche senior perpetual bond issue through Barclays and JPMorgan, expected to weigh in at up to $1.5 billion. Investor meetings run through this week and pricing is likely on Monday December 11. The quasi hybrid issue is structured for accounting purposes, though it gets no equity credit, and proceeds are to help fund the acquisition of Australia’s Rinker, which is still being negotiated. There are two pieces, one callable after year five, the other after year 10, and both step up significantly (around 300bp) if not called. The transaction is rated BBB by Fitch and BBB minus by S&P and size is to be decided, though Fitch assumes up to $1.5 billion. The perpetual will be issued through an SPV and guaranteed by Cemex, Cemex Mexico and New Sunward Holding. Rinker has rejected Cemex’s unsolicited $13 billion takeover bid, for which Fitch put its rating on negative watch. Cemex, meanwhile, is at an advanced stage of syndicating a $9 billion loan through its Spanish unit to pay for the deal.