DUFF & PHELPS RATES CEMEX, S.A.'S SENIOR NOTES 'BBB-'
CHICAGO, May 13 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has assigned a preliminary rating of `BBB-' (Triple-B-Minus) to CEMEX, S.A.'s proposed issue of senior notes due 1998. CEMEX is a Mexican cement producer and is the fourth largest in the world. This rating primarily recognizes CEMEX's leading market position and strong cash flow within Mexico's growing cement industry. This industry is expected to show continued solid growth due to Mexico's housing and infrastructure needs. "Also important to the investment grade rating is the relatively short maturity of the issue (five years), and the company's strong positions in Spain's cement industry which help mitigate the longer-term sovereign issues for Mexico," said William T. Hayes of Duff & Phelps. "Based on the likelihood that the successor to President Salinas will follow a similar path of reforming the Mexican economy, we are confident that Mexico's recent economic and financial progress will continue over the life of this issue. CEMEX's recent acquisitions of Sanson and Valenciana in Spain could ultimately generate cash flows which also help mitigate risks associated with the Mexican economy," he said. The rating does, however, recognize risks in addition to Mexico's sovereign risk. CEMEX must successfully manage the process of assimilation and rationalization in Spain as well as a period of rapid expansion in Mexico. Also, the cement industry can experience significant variability of operating cash flows resulting from its cyclicality and high fixed costs, although historically, Mexico's favorable demographic trends have minimized cyclicality and led to consistent growth in volume. CEMEX increased its financial leverage considerably when it acquired the Spanish businesses. Over the near-term, debt reduction will be important to improving the company's overall financial flexibility. CEMEX's leading market share in Mexico's cement and ready-mix industry provides strong and growing cash flows, which are expected to be more than ample to meet proforma debt service. A more detailed New Financing Report on CEMEX can be obtained by calling Linda Peart at 312-368-3114. -0- 5/13/93 /CONTACT: William T. Hayes, CFA of Duff & Phelps Credit Rating Co., 312-368-3142, or Roberto Guerra of Duff and Phelps in Mexico, 83-35-71-79/
CO: CEMEX, S.A. ST: IN: CST SU: RTG
LR -- NY031 -- 8016 05/13/93 10:32 EDT
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|Date:||May 13, 1993|
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