...Investment Grade: CEMEX, S.A.B. de C.V.'s (CEMEX) ability to achieve its often stated goal of regaining its investment-grade status within the next three to five years is highly dependent upon an increase in cement demand of around 8% per year in the U.S. and 5% in Mexico. Challenges to deleveraging include rising working capital needs and higher taxes. Heavy capex could be an impediment to the company achieving its goal within its stated time frame. CEMEX's capex-to-depreciation ratio has been low during the past few years, at around 0.5x. 2017 Expectations: Fitch Ratings performed three scenario analyses. In its medium-growth model, in which U.S. and Mexican volumes increased by 6% and 3% per year, respectively, CEMEX's net leverage fell to 3.2x and its FFO-adjusted net leverage to 4.5x by 2017. To achieve investment grade, the company must prove its ability to sustain leverage around 2.5x throughout the cycle, while maintaining a sound liquidity position. Recovery of U.S. Volumes: The...
