New Cemex high yield bond offers some value, says CreditSights

CreditSights believes that a proposed private placement dollar and euro bond issue from high yield borrower Cemex is a much better structured transaction than a euro junk bond it had proposed in February. The Mexican cement company is offering a security package and seniority on a par with its bank refinancing completed in August. The timing is also better, following an equity injection, the issuance of a mandatory convertible, a programme of cost-cutting and the disposal of its Australian business. But CreditSights cautions that Cemex remains a weak credit with a debt-to-ebitda ratio of 6.1 times.

The proposed bonds are a seven-year dollar bond likely to be around $1 billion sold as a 114a private placement and an eight year euro tranche of possibly €300 million. The bonds are likely to be priced to yield 9.75% and 9.857% respectively. This is a slight premium to the 9.68% at which the existing euro bonds are reported to trade, notes CreditSights in a note published today.