(Bloomberg) — Cemex SAB has finally reached what it for years called its “north star”: investment-grade status by S&P Global Ratings.
The ratings company upped the cement maker to BBB-, one level above junk, and moved the outlook to stable from positive, according to a Wednesday statement.
Cemex has focused on aggressively slashing debt, which reached about $17 billion in 2012, mostly by using the proceeds from the sale of non-core assets and cutting costs. In 2020, it also announced a plan to narrow its geographic focus to its home country, the US and Europe as it pared its footprint in emerging markets.
“The company has maintained its commitment to deleveraging its capital structure and improving debt protection metrics in pursuit of returning the rating to investment-grade level,” analysts wrote. “For 2024-2025, we expect Cemex to maintain its strategic priorities, with room to further strengthen its key credit metrics.”
The company lost its investment-grade rating in 2009, two years after its $14.2 billion purchase of Rinker Group Ltd. increased Cemex’s exposure to the US just as the housing industry was collapsing. Cemex flirted with default in 2009 before reaching terms with lenders.
The company’s total debt stood at $7.49 billion at the end of 2023, with its leverage ratio at around two times net debt to earnings before items.
S&P expects the company to keep the debt ratio at three times Ebitda in the coming years. Fitch Ratings assigns Cemex a BB rating, one notch below investment grade with a positive outlook.
Cemex bonds have returned 1.3% this year, in line with the average return for emerging-market peers, according to a Bloomberg Index. Cemex shares rose 0.15% to 13.55 pesos at 2:10 p.m. in Mexico City trading. The country’s benchmark index rose 1.74%.
(Updates with contexst starting in first paragraph.)
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Published: 14 Mar 2024, 03:49 AM IST