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CASE STUDY: Cemex gets timing just right on EUR bond deal

Mexican cement and construction materials giant Cemex saw strong oversubscription on its €400mn senior secured 2024 notes, smashing through its initial price thoughts and the company’s secondary yield curve.

Jul 13, 2016 // 4:58PM

Background

Cemex had since early 2016 been monitoring the euro markets in order to identify an issuing window following an improvement in the Latin American credit and currency markets, and the European high-yield market, which was given a boost by the European Central Bank’s asset buying programme.

On 8 June 2016 the company announced a €400mn 8-year NC4 offering of senior secured 2024 notes, the proceeds of which would be used for general funding purposes and to repay existing debt.

Transaction breakdown

Cemex announced the €400mn 8-year note sale at 8:45AM (GMT) on 8 June 2016 with initial price thoughts of between 5.00% and 5.25%.

The book grew rapidly in the hours that followed, allowing the underwriters to revise price guidance down to the 4.875% region.

Following the positive momentum seen during the bookbuilding process Cemex was able to again revise down final pricing to 4.625%, 50bp inside the midpoint initial price thoughts. Adjusting for curve extension, the transaction was priced just inside the company’s secondary levels.

By 5PM London time the deal was massively oversubscribed and had generated over 350 orders totalling close to €3.4bn, mostly placed from European accounts.

The transaction saw strong support from European investors, with 77% of the notes allocated to accounts based in the UK, France, Switzerland, Germany / Austria, and Italy. Investors based in the US accounted for 13% of demand, with the remaining 10% placed with accounts within CEE and the rest of the world.

About 88% of notes were placed with fund managers, while, branks, private banks and other investors picked up the remaining 12% of the notes.

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