Mexico’s Cemex Buys Back Debt in Long Quest for Investment Grade

Published 15 September 2022 20:11:38.620 GMT

(Bloomberg) -- Cemex SAB de CV, the largest cement producer in the Americas, is buying back some of its dollar bonds as it seeks to improve its debt metrics in a decade-long bid to regain its investment-grade status.

The Mexican firm announced late Wednesday an offer to buy back as much as $400 million in dollar-denominated bonds due 2029, 2030 and 2031. The offer is valid through Oct. 12, but the company will pay a premium to investors who tender their notes by Sept. 28.

Cemex has been strengthening its debt profile over the past years, earning an upgrade from Fitch Ratings in June and a positive outlook from S&P Global Ratings last year. Fitch raised the firm to BB+, one notch below investment grade, citing a reduction in the firm’s adjusted net debt, which fell to $7.9 billion last year from $9.4 billion in 2020 and $10.2 billion in 2019. In late July, Cemex announced it had no significant refinancing needs for the next three years.

“We view the tender offer as a sensible move, given Cemex’s sound liquidity and outlook,” Felix Fischer, an analyst at Lucror Analytics, wrote in a note Thursday. “Apart from redeeming the bonds well below par, the company could generate cash interest savings of up to $20 million per annum.”

A representative for Cemex said the company has no internal deadline for achieving investment-grade status.

The Mexican firm’s bonds due 2031 traded at about 80.6 cents on the dollar on Thursday, according to Trace data. Cemex is offering to pay investors who tender early 82.1 cents for the notes, according to the statement.

The firm lost its investment grade rating in 2009 amid a slump in demand in the US and Mexico. The company is currently rated BB by S&P with a positive outlook, and BB+ by Fitch with a stable outlook.

By Aline Oyamada