Recommendation
Given the underlying economics surrounding the business, we rate this bond as overweight. The credit rating of CEMEX is reflective of its cyclical nature or high correlation to the business cycle of the global economy. However, the diversified geographical reach of the company and the tailwinds stemming from the global push towards infrastructure investments make it an attractive investment opportunity for investors with a high-risk profile. The Company recently issued a US$1.75 billion senior secured note in Janaury 2021. The net proceeds will go towards repaying debt and for working capital purposes. We note however that there is a call-risk for Cemex 2025, with call-date of February 2021. It is possible that the company may not prioritize calling this bond given that it has more expensive debt in its capital structure and that the company may prioritize using its cashflow to support working capital as the global economy begins its rebound.
| Industry | Materials |
| Bond Name | CEMEX 5.7% 2025 |
| Credit Rating (S&P) | BB |
| Maturity | Janauary 11th, 2026 |
| Issue Size | US$1.07 Bn |
| Rank | 1 st Lien |
| Current Price (January 13, 2021) (Source: Bloomberg) | US$102.11/US$102.117 |
| Yield to Maturity (Bid/Ask) | 5.102%/5.100% |
| Yield to Next Call (Bid/Ask) | 2.55%/2.46% |
| Yield-to-Worst Call Date | February 21, 2021 |
| Recommendation | Overweight |
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