MEXICO CITY, March 10 (Reuters) - Shares in Mexico's Cemex surged on hopes that the Mexican government would help the world's No. 3 cement maker refinance its debt even as two rating agencies downgraded its corporate bonds.
The jump in the stock price came hours after ratings agency Fitch downgraded the company's debt on the company's failure to issue a $500 million international bond.
After the market closed, Standard & Poor's cut Cemex's rating, also citing concerns about the bond issue flop.
The company's shares closed up 14.47 percent to 7.12 pesos after three days of big losses. In New York, the shares rose 14.68 percent to $4.61. The company lead its index, Mexico's IPC, which gained 3.41 percent.
'Now that Cemex has had to sit down with its banks to renegotiate debt, the market takes into account that it is highly probable that the Mexican government will back the company's debt,' said a trader, who declined to be named, adding that government support was still only a market rumor.
Another trader said that along with any possible government aid, many were optimistic Cemex would come to a swift agreement with its banks to refinance maturing debt.
Mexico's finance ministry declined to comment on Tuesday.
Market rumors have been circulating for weeks about government aid for Cemex as the Monterrey-based company faces $4.1 billion in debt maturities this year and more big obligations in 2010 and 2011.
Cemex had aimed to ease its refinancing pressures with a $500 million bond but was unable to sell it last week without paying a high premium amid the global financial crisis.
Cemex said on Monday it was renegotiating its debt after the unsuccessful bond issue and declined to comment on whether it was seeking government aid.
Cemex, which made its biggest ever takeover in 2007, had a total debt of $18.78 billion at the end of last year and faces short-term repayment pressures amid difficult market conditions and the global financial crisis.
Cemex went to its banks late last year to refinance maturing debt and had planned to fill a financing hole through international capital markets.
Cemex plans to pay $3.6 billion in debt this year with free cash flow and asset sales, but investors worry it will be hard to sell off assets amid the global crisis.
(Reporting by Lizbeth Salazar and Robin Emmott) Keywords: CEMEX/ (robin.emmott@thomsonreuters.com; +52 81 8345 7553; Reuters Messaging: robin.emmott.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The jump in the stock price came hours after ratings agency Fitch downgraded the company's debt on the company's failure to issue a $500 million international bond.
After the market closed, Standard & Poor's cut Cemex's rating, also citing concerns about the bond issue flop.
The company's shares closed up 14.47 percent to 7.12 pesos after three days of big losses. In New York, the shares rose 14.68 percent to $4.61. The company lead its index, Mexico's IPC, which gained 3.41 percent.
'Now that Cemex has had to sit down with its banks to renegotiate debt, the market takes into account that it is highly probable that the Mexican government will back the company's debt,' said a trader, who declined to be named, adding that government support was still only a market rumor.
Another trader said that along with any possible government aid, many were optimistic Cemex would come to a swift agreement with its banks to refinance maturing debt.
Mexico's finance ministry declined to comment on Tuesday.
Market rumors have been circulating for weeks about government aid for Cemex as the Monterrey-based company faces $4.1 billion in debt maturities this year and more big obligations in 2010 and 2011.
Cemex had aimed to ease its refinancing pressures with a $500 million bond but was unable to sell it last week without paying a high premium amid the global financial crisis.
Cemex said on Monday it was renegotiating its debt after the unsuccessful bond issue and declined to comment on whether it was seeking government aid.
Cemex, which made its biggest ever takeover in 2007, had a total debt of $18.78 billion at the end of last year and faces short-term repayment pressures amid difficult market conditions and the global financial crisis.
Cemex went to its banks late last year to refinance maturing debt and had planned to fill a financing hole through international capital markets.
Cemex plans to pay $3.6 billion in debt this year with free cash flow and asset sales, but investors worry it will be hard to sell off assets amid the global crisis.
(Reporting by Lizbeth Salazar and Robin Emmott) Keywords: CEMEX/ (robin.emmott@thomsonreuters.com; +52 81 8345 7553; Reuters Messaging: robin.emmott.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.