CEMEX Yield Growth Prompts Investor Confidence

Via Bloomberg.com:

Cemex SAB’s bonds are yielding more than twice the average for Mexican corporate debt, prompting Citigroup Inc. and Barclays Plc to recommend buying the notes in a bet the company’s cement sales will weather the global economic slowdown.

"It’s a good time to buy the bonds if you can stomach the volatility,” says Eric Ollom, a credit strategist at Citigroup Inc. Ollom, who recommends investors buy Cemex’s notes due in 2018, said the following in a telephone interview from New York:

“It seems to have bottomed out. The market still has concerns regarding growth, profits, and bank covenants, but few believe a default is forthcoming.”

Click here for more on CEMEX bonds.

CEMEX Scraps $650 Million Bond Offering

Cemex SAB, the largest cement maker in the Americas, scrapped a $650 million bond offering today. The company pulled the sale of eight-year bonds because of “volatility” in global markets, said Jorge Perez, a spokesman for the Monterrey, Mexico-based company.

Cemex, battered by a slowdown in the U.S., its biggest foreign market, had planned to sell the bonds to repay debt stemming from a $15 billion loan in 2009 that helped it refinance in order to avoid default. The company needs to pay back $200 million of debt by the year's end to prevent the interest rate on $7.6 billion of loans from rising by 50 basis points.

From the report: "The yield on Cemex’s benchmark dollar bonds due in 2020 jumped 40 basis points, or 0.40 percentage point, to 9.74 percent at 5 p.m. New York time, the highest since October. Jack Deino, who oversees approximately $1.8 billion of emerging-market debt at Invesco Inv. in New York, said "For Cemex, what’s going to move it or break it is the recovery of the construction market in the U.S."