CEMEX Pursues US$3 Billion Debt Refinancing Deal With Banks

CEMEX is engaged in discussions with banks to secure financing for its US$3 billion debt line, Fernando González, CEO, CEMEX, and Maher Al-Haffar, CFO, CEMEX, tell Bloomberg News.

S&P Global Ratings recently revisited its previous assessment of CEMEX, which had not seen a "positive perspective" since the financial crisis of 2009 when its debt stood at US$18.8 billion. In December, the rating was at BB but has since been upgraded to BB+. The agency has highlighted the potential for further rating improvements if the company maintains its financial discipline and continues to expand its profit margins.

"We are presently in negotiations with our banking partners because the majority of our maturing debt consists of bank debt," says Al-Haffar for Bloomberg.

The timing of this refinancing plan has proven to be highly opportune, with the robust performance of the Mexican peso, which appreciated 16% this year. However, there are concerns about the long-term impact, given that CEMEX's debt is in euros and dollars.

"The dynamics could become intricate because our pricing is aligned with inflation in pesos," says González. Should the peso continue to appreciate, dollar-denominated prices could surge.

Locally, CEMEX is planning to issue bonds in Mexican pesos, similar to stock certificates (Cebures), a strategy also adopted by companies such as América Móvil, which are taking advantage of the strength of the local currency.

In the first half of the year, CEMEX reported notable growth in net sales, rising from US$7.7 billion to US$8.6 billion. Gross profit also saw an increase from US$2.4 billion to US$2.8 billion, representing 31.3% and 33.3% of net sales, respectively.

"Consolidated net sales in the second quarter of 2023 reached US$4.6 billion, marking a +10% increase on a like-to-like basis compared to the second quarter of 2022,"reads CEMEX’s 2Q23 report. The growth was primarily driven by higher prices in local currency across all regions, contributing significantly to the company's top-line expansion.