Cemex Jumbo Restarts DCM

Cemex has rung in the New Year with a $1bn 7-year priced at the tight end of guidance on $5.75bn in orders. The 2018 NC4 priced at 99.364 with a 9.000% coupon to yield 9.125%, versus 9.125%-9.250% guidance which was revised from 9.375% area and mid-9.000% early whispers. “Compared with the 2016s, it’s fairly priced within the curve,” Carlos Legaspy, president of Precise Investment Management, which has $400m in fixed income under management, tells LatinFinance. He spotted the 2016 trading to yield around 8.72%, and found the initial pricing indications to be cheap. The bond was up 1.125-1.250 points in the gray Tuesday afternoon, according to investors. On the back of a brief mid-December roadshow, the B/B+ Mexican cement maker is continuing debt rollovers central to a challenging plan to de-lever and regain investment-grade status. In addition to prepping for a quick January execution, one of the aims of Cemex’s meeting the buyside in December was to address re-working of covenants it had agreed with banks in October after a string of quarterly losses jeopardized its ability to stay on deleveraging target. “The company’s operating and free cashflow should increase sharply once underlying business conditions improve due to its operating leverage. However, a rebound that would be substantial enough to accelerate debt reduction is not expected to occur until at least 2012,” Fitch says. The $5.75bn book is one of the largest-ever for the issuer, says a banker on the deal, who notes 380 accounts participated, the majority from the US. Bank of America Merrill Lynch and JPMorgan, managers on last month’s roadshow, were global coordinators. They were joined by BNP, Citi, HSBC, RBS, and Santander as bookrunners. The issue is guaranteed by Cemex’s Mexico, Spain and New Sunward Holding units and secured by a first priority interest over a collateral package consisting of all of the shares of the Mexican and 6 other units. Proceeds are marked for debt refinancing and general c