Mexican materials company CEMEX was upgraded to BB from BB- with a positive outlook by Fitch. The upgrade comes on the back of CEMEX’s “strong operating performance during the last 18 months” and proceeds from carbon credit sales of $550mn helping it reduce net debt by $1.5bn to $8.1bn. Solid US cement demand continues to help CEMEX as it generates ~30% of EBITDA from the US, adding to its positive outlook revision. Besides, successful refinancing of $3.25bn of bank debt on a fully unsecured basis and public debt refinancing and repayment of $4bn, should increase yearly free cash flows by ~$$200mn. Its strong business position, normalization of the Mexican market, positive trend in the US markets, healthy EBITDA generation, reduced leverage to 3x in 2021 from 4x in 2020 and positive free cash flows of $674mn in 2020 contribute to its rating upgrade.
CEMEX’s dollar bonds were flat with its 5.125% Perp at 101.18, yielding 4.83%.
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