At the time of writing, the engineering company’s shares are up 1.24% to $21.16.
The Cimic Group provides a range of services to the infrastructure, resources and property markets. These include construction, mining, mineral processing, engineering, concessions, and operation and maintenance services.
The Cimic Eurobond issuance
The Cimic share price rise came on the back of the company’s latest update.
In a statement to the ASX this morning, Cimic advised it has issued a €500 million corporate Eurobond.
The offer received broad interest from investors, which led to an oversubscription of more than double the orderbook.
The fixed-rate notes, with a maturity of 8 years, were priced at a yield of 1.593%.
CIMIC group executive chair and CEO, Juan Santamaria commented:
“This successful transaction represents CIMIC’s debut issue in the European Debt Capital Markets and achieves a substantial extension of CIMIC’s long-term debt maturity profile.”
The proceeds from the issuance will be put towards general working purposes, including refinancing the company’s existing bank facilities.
Moody’s and S&P Global Ratings bond award
Bond rating agencies are firms that evaluate the creditworthiness of both the debt securities and the issuing company. These agencies provide ratings, commentary and research on businesses. The ratings are then used by investment professionals to determine the likelihood of the debt being repaid.
Bond ratings range from an investment grade of ‘AAA’, meaning a very strong capacity to meet financial commitments, and minimal credit risk. The speculative grade of ‘C’ or ‘D’ indicates likely payment default on financial commitments, and bankruptcy.
Credit ratings agencies Moody’s and S&P Global Ratings (formerly Standard & Poor’s) will award the bonds with solid ratings of Baa2 and BBB, respectively. This is in the mid-range of the bond credit ratings, stating “adequate capacity to meet financial commitments, moderate credit risk”.
About the Cimic share price
Over the last 12 months, the Cimic shares have sunk more than 10%, with year-to-date performance around 15% lower. The company’s share price reached a 52-week high of $28.72 last June, before moving in circles.
More recently, Cimic shares hit a 52-week low of $16.86 last month, and have slowly bounced back higher.
Based on valuation grounds, Cimic commands a market capitalisation of roughly $6.5 billion, with approximately 311 million shares outstanding.