LatinFinance - January/February 2015 - 48

CORPORATE ISSUER

Cemex
CORPORATE HIGH-YIELD BOND

Cemex $1bn/€400m dual tranche bond
The cement maker's rehabilitation in global markets goes
on, most impressively this year in a dual-currency bond
combined with a liability management exercise

48 LATINFINANCE.COM - January/February 2015

working at Cemex since 1998 and who was
appointed chief financial officer in May.
"We have a very intense outreach
program, and we go to all the conferences.
We hold an investment day once a year, and
management has a close relationship with
investors. [...] That's one of the reasons
why Cemex can have multiple tools at its
disposal to achieve our goals."
Cemex's prowess as an issuer stands
out most clearly in a sale in late March of a
JOSÉ ANTONIO GONZÁLEZ, CEMEX

"IT PAYS TO BE
PREPARED. IT
ALLOWED US TO
ACCESS A VERY SMALL
WINDOW OF
OPPORTUNITY"
LOOKING OUT: Cemex has a "rigorous
process to read the market" says chief
financial officer José Antonio González

Source: flickr by Official Cemex Images

Cemex's drive to lift itself from debt
troubles after the 2008 global crisis
continues to impress the market. The
company has been working on a threepronged effort: to improve its credit
profile, diversify its investor base and
refinance on better terms.
Few Latin American companies were as
active as the Mexican cement maker on so
many different fronts in the 12 months that
ended in September. It issued in dollars
and euros, carried out a string of liability
management exercises, worked with bank
lenders and issued contingent convertible
instruments.
"Cemex's strategy in 2013 and 2014
was based on being very proactive, to find
the best opportunities to continuously
improve its capital structure, which means
extending the maturity of our debt in order
to reduce costs and reduce refinancing
risks," says the company's chief financial
officer, José Antonio González.
Cemex's success in the capital markets
in recent years comes down to its efforts to
monitor conditions closely, its readiness to
seize good opportunities, and its efforts to
build links with investors around the globe,
he says.
"We have a very rigorous
process to read the market, and
we are constantly monitoring the
market [...] We have a group of
banks that are always keeping an
eye out for Cemex. They lend us
their capabilities," he says.
González's team ensures
that Cemex's documentation is
always ready to tap markets on
short notice. The team members
are also in constant touch with
a broad investor base, says
the executive who has been

bond denominated in dollars and euros,
which wins the High-Yield Bond of the Year
award.
Investors piled into the issue, pushing
Cemex to increase the size of the euro
portion by a third, to €400 million ($551
million), at the same time that it sold a $1
billion bond. Both tranches were around
five-times oversubscribed.
Lead managers Crédit Agricole, Citi,
HSBC, JPMorgan and Santander priced the
euro-denominated, seven-year noncall
three bond at par to yield 5.25% and the $1
billion, 10-year noncall five dollar bond to
yield 6%. Cleary Gottlieb, Ritch Mueller,
and Skadden provided legal advice.
The deal was Cemex's return to the
euro market after an absence of two
years. It combined the deal with a liability
management exercise through which it
bought nearly $1.1 billion worth of 9.25%,
2020 notes and 9%, 2018 notes.
The transaction was so successful that
Cemex launched an almost identical dualtranche deal in September, selling a $4.75%,
€400 million 2022 note and a 5.7%, $1.1
billion 2025 bond, drawing strong interest
from investors who have applauded the
company's refinancing efforts since 2009.
That deal came right after the European
Central Bank cut Eurozone interest rates
to an all-time low, driving a rally in the
region's markets - more evidence of the
company's timing and preparedness.
"We did all the hard work to access the
market," González says. "It pays off to be
prepared, because that allowed us to access
a very small window of opportunity in the
market. After that window in September,
the volatility came back very strongly due
to the slowdown in Europe and geopolitical
risks."
The company was also active in the loan
and equity markets. In late September,
Cemex arranged a $1.35 billion amortizing
credit facility with nine banks to repay an
existing credit. The facility has a four-year
average life. The company also closed a
$650 million financing package for a wind
farm in April, comprising 75% debt and 25%
equity.
Holders of many of its 4.875%, 2015
convertible bonds swapped them for
shares during the year, leaving just
$200 million outstanding by the end of
September. In a sophisticated operation,
Cemex then sold $200 million of
contingent convertible units, which bought
it the option to issue subordinated notes to
cover possible redemptions. LF
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