Cemex is selling the most debt overseas this year by a Mexican company to repay bank loans even as its borrowing costs climb to an almost six-month high.
The company’s offering of eight-year notes yesterday pushed its sales this year to US$2.45bn, according to data compiled by Bloomberg. The yield on Cemex’s benchmark dollar bonds due in 2020 jumped 68 basis points, or 0.68 percentage point, in the past month and touched 9.37 per cent this week, the highest since December 31. Average borrowing costs for Mexican companies rose 12 basis points in the same period, while yields on Brazilian corporate debt increased two, according to JPMorgan Chase & Co.
Cemex is stepping up borrowing to repay debt stemming from a US$15bn bank loan refinancing in 2009 that helped it avoid default as slowing U.S. growth reduces demand for building materials in the company’s biggest foreign market. The company, based in Monterrey, Mexico, is seeking to pay back US$200m of debt by yearend to prevent the interest rate on US$7.6bn of loans from rising by 50 basis points.
“When you have to repay debt, you do it when you can,” Carlos Legaspy, who manages about US$300m in emerging- market debt including Cemex notes at San Diego, California-based Precise Securities, said in a telephone interview.
The company sold US$650m of bonds to yield 9.5 per cent yesterday, or 580 basis points more than Mexican government notes due in 2019, according to data compiled by Bloomberg. Similar-maturity bonds sold by Holcim’s yield 4.75 per cent.