Mexican cement maker Cemex SAB de CV is returning to global markets after a nearly two-year hiatus, testing investor appetite with a debut offering of green securities.
(Bloomberg) — Mexican cement maker Cemex SAB de CV is returning to global markets after a nearly two-year hiatus, testing investor appetite with a debut offering of green securities.
The perpetual notes, offered with a call option after 5.25 years, will be used to finance or refinance eligible green projects, according to a person familiar with the matter, who asked not to be identified because they’re not authorized to speak about it.
Early pricing discussions on the hybrid securities call for a yield in the area of 9%, the person added.
Cemex’s offered notes also come with potential coupon step-ups. If the company doesn’t call the securities in 5.25 years, the coupon is set to climb by 25 basis points.
Another increase could occur later, hinging on whether the company is junk- or investment-grade rated. The cement maker is currently scored BB+, the highest junk-rated level, by S&P Global Ratings.
The proposed hybrid securities, meantime, are rated B+ by S&P, or four levels below investment grade.
BBVA, BNP Paribas, BofA Securities, IMI-Intesa Sanpaolo and JPMorgan Chase & Co. are running the deal.
A spokesperson for Cemex didn’t immediately respond to request for comment.
Cemex has been clawing its way back to investment grade after S&P cut it to junk in 2009.
Cement production spews out massive amounts of greenhouse gases, though the company insists that new technology will help cut net carbon emissions.
While the green securities will be the first of their kind for Cemex, the firm has previously raised cash tied to environmental, social and governance goals.
In October, it closed a €500 million ($533 million) sustainability-linked loan.
And Banco Bilbao Vizcaya Argentaria’s Mexican unit in November made available a credit line of 1.6 billion pesos ($88 million) to Cemex suppliers that meet sustainability requirements.
–With assistance from Michael O’Boyle and Esteban Duarte.
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