Cemex Switching EUR for Longer USD

Mexico’s Cemex is set to replace shorter-term euro-denominated debt with attractively priced 6-year money, tightening the yield on a new $600m bond more than 50bp from initial talk while getting $8.3bn demand. The Mexican cement maker launched a tender for its 2014 euro bonds Thursday while simultaneously popping up for its first DCM tap of 2013. The B/B+ senior secured notes priced at par with a 5.875% coupon to yield 5.875%, tight to 6.25%-area guidance and earlier mid 6%-area whispers. The bonds were trading up 0.5 points Thursday afternoon, according to investors. Bankers on the deal highlight it being the first single B in the region to get a 5-handle, while noting Cemex is an atypical single B. The pricing compares well to the 5.85% levewhere Cemex’s 2018s were trading. Getting a low coupon that would drive down its average cost of debt was seen as the issuer’s main motivation for choosing a 6-year, even though it could also likely achieve attractive levels in the 10-year space. Nearly 450 accounts participated in the deal. Cemex will use the proceeds for general purposes and to fund the cash buyback of up to EUR200m ($260m) 4.75% 2014 bonds, of which there are EUR430m outstanding. The move comes in line with Cemex officials’ stated goals of pushing back maturities. It is offering holders EUR1,027.50 cash per EUR1,000.00 principal in an offer expiring March 25. Bank of America Merrill Lynch, Citi, HSBC and Santander managed the new bond sale and are also handling the tender. Cemex last month expressed interest in exchanging its convertible bonds due 2015, 2016 and 2018 for longer-dated ones. After a busy 2012 that featured two debt exchanges totaling more than $7bn, a $1.5bn bond issue and a $1.1bn ex-Mexico LatAm equity carveout, Cemex expects to focus on organic growth in 2013, officials have said, to be complemented by liability management when conditions are appropriate. Today in the DCM, Alicorp is expected to price a $450m 2023 bond, also drawing a s