Year: 2022

Winner: Cemex $3BN Sustainbaility-Linked Loan

Midway through 2021, Cemex, the global cement company, began thinking about possible
new financings as the world emerged from the pandemic.
It had raised money during the unprecedented worldwide shutdown and was using cash to
deleverage the company, but it wanted something different.
“We felt that it was time for us to go to the market with something profoundly different than
what we had done in the past,” says Maher Al-Haffar, Cemex’s CFO.
That something different was a landmark dual-tranche senior unsecured credit facility that
came with the benefit of an ESG component.
“We think of the transaction as something real seminal, a pivotal transaction for us,” says AlHaffar.
The transaction, which wins the award for Syndicated Loan of the Year, was Cemex’s first
major senior unsecured loan since 2009. The original idea was a $3 billion loan, but demand
from banks wanting to participate was so great that it was upsized to $3.25 billion. The loan
was split in two, with a 5-year amortizing term loan for $1.5 billion and 5-year committed
revolving credit facility for $1.75 billion. The transaction closed at the end of October 2021.
The company wanted the transaction to reflect its ongoing effort to secure an investment-grade
rating. Al-Haffar says that from a documentation perspective, the loan was packaged as an
investment-grade transaction.
Fitch Ratings upgraded Cemex to BB+ in June 2022, a notch below investment grade, with a
stable outlook.
Debora Jalles, a director at Fitch who co-authored a recent outlook on cement issuers in the
region, says an upgrade to investment grade would depend on debt/EBITDA ratio below 2.5
times and a debt below $7 billion.
Cemex is certainly moving toward an investment grade rating with adjusted net debt dropping
from $10.2 billion in 2019 to $7.9 billion in 2021 and its debt/EBITDA forecast to drop below
3 times in 2023.
A big decision in this direction was opting for a dollar-denominated transaction, because of the
liquidity it provided, especially through the revolving credit facility. Cemex’s prior transaction
had been a multi-currency deal that included Mexican pesos, British pounds and euros, as well
as dollars. While that deal reflected the company’s global reach, the dollar market made more
financial sense this time, says Al-Haffar.

“We did a dollar-denominated transaction, which we felt was the most liquid market with the
best price discovery from Cemex risk,” he says.
Cemex came up with a creative solution to gain access to euros and pesos. It did a crosscurrency swap for euros, which provided an extra boost from the discount received. It did a
bilateral transaction in pesos that replicated the conditions of the dollar loan but was not part
of the original deal.
Another important dimension was the company’s discussions with banks, both those that had
worked with Cemex for some time and those interested in taking part in the new loan
structure. As part of the preparation for the loan, Cemex found that there were banks involved
in earlier deals that no longer had the appetite, while a host of new banks wanted to
“We did not want anyone in the deal who did not want to be there and having this kind of
conversation with banks made the whole relationship even better,” Al-Haffar says. “It created a
level of transparency and confidence on both sides and we ended up getting the best terms for
everyone. I think in the end it sent a very strong message to the market that this new
transaction as 100% market driven.” LF

Joint Bookrunners, Joint Lead Arrangers: BNP Paribas; BofA; Citigroup; J.P. Morgan
Sustainability Structuring Agent: ING Capital
Issuer’s Legal Advisors: GHR Rechtsanwälte AG; Skadden, Arps, Slate Meagher & Flom
Underwriters’ Legal Advisors: Cleary Gottlieb; Galicia Abogados

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award category winners. For updates please email