Cemex Chief Executive Officer Lorenzo Zambrano is ready to pay higher rates to avoid spending limits imposed by banks in a $15 billion loan restructuring, according to RBS Securities Inc. and Actinver SA.
The seven-year dollar bonds that Monterrey, Mexico-based Cemex plans to sell this week probably will yield more than nine per cent, RBS and Actinver said. That tops the average rate of about six per cent that Cemex says it’s paying on the loans the company renegotiated August to avoid default.
Zambrano, 65, is returning to the bond market nine months after his failure to sell $500 million of securities forced him to extend payments on bank debt he took on to finance the $14.2 billion acquisition of Sydney-based Rinker Group Ltd. in 2007. The spending restraints that banks including HSBC Holdings Plc and Banco Santander SA forced upon Cemex are stifling Zambrano’s goals of expanding again, said Francisco Suarez, an analyst at Mexico City-based brokerage Actinver.
“The tradeoff between the financial cost and exiting the restrictions of this bank debt is worth it for Cemex,” Suarez said. “It’s terribly restrictive in all areas.”
Cemex may sell $1 billion of the seven-year notes at yields between 9.5 percent and 9.75 percent, according to Bevan Rosenbloom, a corporate debt strategist at RBS in Stamford, Connecticut. The company also plans to sell 300 million euros ($444.5 million) of eight- year bonds, according to a banker involved with the transaction who declined to be identified because terms aren’t set.