Mexico: Cemex paves way for emerging markets hybrids

Mexico joined the rush of hybrid capital issuance at the end of 2006 when cement manufacturer Cemex offered a dual-tranche senior perpetual bond issue through Barclays Capital and JPMorgan. Although Cemex is a global firm with a BBB rating it is still Mexico-based, and market participants say that this deal could well be followed by similarly complex, bespoke structures from other emerging markets issuers in 2007. Although sources close to the deal say that Cemex would have done the deal regardless of its hostile bid for Australian rival Rinker Group, the ability to raise funds with non-dilutive hybrid capital structures could prove extremely useful for the growing numbers of leading emerging markets firms looking to acquire rivals, especially in the developed world.