Cemex SAB de CV will likely issue at least $1 billion in seven-year bonds offering a yield around 10% when it prices its deal next week, market watchers say.
The company is meeting with investors around the U.S. this week and ending its roadshow Dec. 8, when analysts expect the new deal to price.
Tuesday, Cemex said in a shelf filing with the Securities and Exchange Commission that it intends to bring to market a benchmark-sized, seven-year bond offer. Proceeds from the offering will go toward debt refinancing and general corporate purposes, the company said.
Cemex officials weren’t immediately available for comment when contacted by Dow Jones Newswires.
The bond placement comes at an interesting time as the rally in emerging markets assets is cooling and investors ease off on buying as they look to end the year on a high note. That has dried up liquidity, for the most part, and new debt issuance from the developing world has slowed after a heavy year.
Still, market participants expect a positive reception to Cemex’s bond offer, given that there is ample money on the sidelines and many investors looking to get in on red- hot emerging markets assets.
Investors and analysts see the company offering a yield between 9.5% and 10.5%. That’s roughly in line with Cemex’s 2014 euro-denominated bonds which are currently trading around 9.5% on the secondary market. Economists expect Mexico’s economy to go from a deep contraction this year to 3% growth in 2010 and many see the improvement to be a boon for the country’s assets. That could be a big plus for Cemex as it looks to get itself back on its feet.
"It’s a company that’s highly leveraged to the economic rebound," said Eric Ollom, chief strategist for emerging markets debt at Jefferies. Cemex’s efforts to navigate through its heavy debt load may prove fruitful, Ollom said, which could help improve its credit rating next year and bring yields on the new issue lower by 2% to 33%.