Cemex plans to sell benchmark dollar bonds in international markets as early as next week after the company was forced to scuttle a US$500m issue in March amid a surge in borrowing costs.
Cemex will begin marketing the seven-year bond to investors on Dec. 3, said a person familiar with the offering who declined to be identified because the terms aren’t set. Citigroup Inc., Barclays Plc, Bank of America Corp. and JPMorgan Chase & Co. are arranging the transaction, which will be callable after four years, the person said. Benchmark typically means at least US$500m in size.
Monterrey, Mexico-based Cemex shelved its March debt sale after investors asked for interest rates that the company wasn’t willing to pay. It reached a $15 billion refinancing agreement with its banks in August to avoid default. Yields on Cemex’s 4.75 per cent euro bonds due in 2014 have tumbled to 9.70 percent from 23.71 percent on March 2, according to Bloomberg data.
Cemex may pay a “high” coupon because of where its debt trades and on concerns over a slow global construction recovery, said Anne Milne, chief of Latin America corporate research for Deutsche Bank AG in New York. “The No. 1 concern is the ability to increase their free cash flow from operations. Mexico is doing OK. But the U.S. and Spain, which are two of their biggest markets, are just still stuck in the mud.” (Edited report from Bloomberg).