Cemex Seeks Ambitious Spread on Local ABS

Mexico’s Cemex is heard seeking ambitious spread levels on an up to MXP2.8bn ($213m) local asset-backed bond as it looks to refinance outstanding debt at a lower rate. Yet whether the cement company will achieve its pricing goals is still a matter for debate. Some investors are already heard drawing a starting line at TIIE+200bp if the borrower wants their participation in what is expected to be a 4 or 5-year bond backed by account receivables held by a trust. However, Cemex is heard sounding out accounts with a much tighter and audacious plus 80bp spread. Pricing is scheduled for August 4 and the bond will carry a similar structure to Cemex’s MXP2.2bn of asset-backed bonds due December 2011, which were priced at TIIE+250bp in 2009. Those bonds were also backed by a trust that held account receivables originated by Cemex Mexico and Cemex Concretos. “The company is exercising a call option in which it wants to refinance at a lower rate in an uncertain market,” says an investor who may opt out of this transaction but participated in 2009. “They want to rollover debt at a low rate at the expense of higher costs to investors.” The new bonds are expected to carry a local mxAAA rating. Proceeds are partly going to refinance the existing 2011s and for working capital. The Mexican cement company was last in the dollar market earlier this month with a $650m retap of its existing 9% 2018s through Citi, essentially helping it cover its financing needs for this year and next. IXE is the sole lead on the local transaction.